FED is pausing but EM’s are already fed up and the dynamics of the 2022-trade remains our frame of guidance. But what could turn the table?
Something for your Espresso: An (almost) explicit pause from the ECB?
The ECB seems closer to softening up than the Fed even if they delivered a hike yesterday. An almost explicit pause was promised in the written statement. ECB pricing for 2024 looks ODD compared to Fed pricing still.
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EM by EM #21 Why China is uninvestable yet tough to short
7.30 was the line in the sand but can the Chinese defend their thench? We find it unlikely. But the battleground is not a safe place yet
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Something for your Espresso: Energy not yet a consensus bet, being short Europe is..
Energy keeps performing against all peers and it seems like positioning is still underweight despite the recent bullishness. European positioning is getting short, but data keeps backing up that view.
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Something for your Espresso: Is the stabilization in Asian FX sustainable?
Rhetorical intervention in JPY and CNY helped risk assets and high beta stocks perform yesterday, but is the stabilization sustainable or still fundamentally challenged? We lean towards the latter.
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Something for your Espresso: Are Chinese services falling apart as well?
Kind of a shocker for markets with weakness in Chinese Services despite a weekend of benign news. The reopening impulse in Services is fading, which shows how important it is to stabilize Construction/Manufacturing.
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Great Game – Biden on charm offensive
President Biden flies to South Asia on a charm offensive. But what can he accomplish and what will the Chinese do?
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Something for your Espresso: Month-end or trend?
The EURUSD reversal on the back of hot inflation in Europe was a surprising move, but one we fancy. The Chinese stabilization is walking a tightrope despite efforts from the authorities to prop up CNY asset values.
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Something for your Espresso: EUR-flation back on the table
Markets seem to perceive EUR-flation as stickier than the USD-flation. We find the assessment unwarranted but also admittedly have to see it as a sign of positioning.
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China Watch: The big losers from an imports pull-back
‘When China sneezes the West catches a cold’. We’ve said that before, but who is really most reliant on a well-functioning Chinese economy? Europe is now clearly the next shoe to drop. Could long cyclical Asia vs short Cyclical Europe be a strong RV trade?
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Something for your Espresso: The JPY and the CNY in the (Jackson) Hole?
Will the Jay-Man alleviate some of the pressures on the PBoC at Jackson Hole? And will the ECB strike a different tone than the Fed?
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Macro Strategy Nugget: Why USDCNH > or < 7.30 is everything you need to watch
USDCNH above or below 7.20 changes the global macro regime and leads to a rotation in case it continues. Are you prepared accordingly?
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Something for your Espresso: BRICS-week while EUR-flation falls apart
The upcoming BRICS-meeting is the key event this week. Will Xi solidify the CNY amidst the meeting to bolster BRICS-currency hopes? Meanwhile, European inflation keeps delivering “dovish” signals beneath the hood.
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Steno Signals #61 – The end of China as we know it?
The doom and gloom in China is suddenly back with a vengeance and everyone seems convinced that China is now in a structural decline driven by an embedded balance sheet recession and extremely weak demographics. But how bad is it really?
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Portfolio Watch: Catching a Chinese cold?
Summer volatility razor, BoJ and Xi’s real estate malaise have all contributed to headwinds for most asset classes. We are still alive and kicking despite a few knocks and bruises. Read here for full context
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EM BY EM #17 China: Real Estate Complex and the “phony” stimulus
In 2021, I took a bearish position in the Chinese real estate market. However, the scale of the repercussions stemming from the ongoing deleveraging process in Chinese real estate has raised our concerns. Despite this, we believe that the CCP will likely need to intervene in the near term to address the situation
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FX Nugget: Can the PBoC defy gravity? 7.30 watch
Will the PBoC defend the 7.30 handle at all costs? What does it mean for risk appetite? And how will Commodity markets be impacted? 5 nuggets on the importance of USDCNY right here!
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5 Things We Watch (In China) – Stimuli, USD vs CNY, Liquidity & PBoC
Welcome back to our Wednesday series where we take you through the world of global macro and what to look out for going forward. Since we have not covered much else than China this week and the fact that it remains one of the key macro stories we thought we would exclusively zoom in on 5 things we watch related to China.
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China asset watch: Keys for Xi to getting the economy and equities back going
What are the options on the table for Xi? And how will Chinese assets react to different types of stimulus? We take a look at the scenarios in this piece and find that things may be improving already from a rate of change perspective.
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Something for your Espresso: USDCNY is now the global bellwether (again)
The panic will subside if the PBoC manages to defend the 7.30 handle in USDCNY. Could we reach “peak China panic” during today’s trading? We look forward to it alongside the FOMC meeting minutes in our morning report.
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China Watch: The People’s Bank Pickle – is 7.30 the line in the sand?
The PBoC rate cuts are not a surprise to us as the pressures facing China are intensifying. But where does it leave monetary policy going forward?
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Investment Screening: Why Biden’s Order is Actually a Good Sign for US-China Relations
I think Biden’s executive order on investment screening is actually a good sign for US-China relations and a part of the ongoing “mini-detente”. Read why!
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Remember our Monthly Premium Q&A on Wednesday
Tune in to hear all about Country Garden and the outlook for China
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Will Xi fire the stimulus cannon?
The Chinese economy is flirting with a deflationary spiral, but Xi is so far sticking to his New China Playbook where long-term economic transformation takes precedence over double-digit growth in the short-term. But as bad numbers rain down over the Chinese economy, rumours of an upcoming stimulus package intensifies.
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China Deflation Watch – What happens in China stays in China
Things are starting to look worse for China just as everyone started to sense that a rebound might have been on the menu. Real estate is turning outright bearish as we speak, but will China continue to be the West’s manufacturing hub?
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Something for your Espresso: In China, there is a Lehman every year
Focus is back on China with issues in the trust industries. Country Garden looks increasingly like an Evergrande 2.0 case but global markets are not overly worried. Should they be? After all, there is a Lehman in China almost yearly.
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Asset Allocation Watch: Country Garden melt-down? 5 charts on cross-asset spill-overs!
Which assets will be on the move if the Chinese RE meltdown continues on Monday? We have gathered the empirical evidence in this short but data-heavy piece. Best of luck for trading during the week ahead!
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Steno Signals #60: Worse than Lehman in China!? The 3 most important questions right now!
Either the commodity market is 100% wrong or else China is amidst a rebound. What does that mean for the hopes of getting inflation back to target? And will it impact the yield curve? Here are the three most important questions for investors right now!
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5 Things We Watch – Fed overtightening, Curve steepening, US CPI, BoJ & China
Ahead of the CPI release tomorrow we zoom out to provide you with the bigger picture and what to watch out for in global macro over the next weeks.
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Something for your Espresso: Time to wake up for the CCP?
Nothing out of China supports the China bulls and the bears are loud again this morning, but is the data now getting bad enough for the CCP to put the pedal to the metal? Meanwhile the BoJ is caught between a rock and a hard place.
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