The Chinese retail buying of gold continues, but Western funds now also see a compelling real-rates case to join the party. The big question is whether the USD will weaken sufficiently to reduce the Asian demand for precious metals.
Something for your Espresso: Gung ho or no?
The inflation report holds the potential to fuel the liquidity beta risk party further, and if we take clues from China, we ought to expect a soft(ish) report. The tide needs to turn on USD vs Asian FX to truly alter the picture.
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EM Watch: Western investors are tired of China and Japan “crying wolf”
The JPY is once again suffering from a weak CNY, and the metals trade is not performing despite FX debasement risks in Asia. Have markets gotten tired of the co-ordinated “cry wolf” rhetoric from Asian monetary authorities?
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EM Watch: Is the Chinese copper demand down 40%?
The Chinese apparent copper consumption is absolutely on the floor, while the copper market is turning bid again. Is the Chinese consensus getting too upbeat again? And how will it market in the West during the summer?
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Steno Signals #104 – Get ready for a WAVE of liquidity in July!
While the rate of change is turning bearish on growth- and inflation, we may (temporarily) end up in a goldilocks scenario in July. Bonds tend to perform alongside equities in such a scenario. Buy risk and head for the summer cottage?
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EM Watch: Is China making a fool out of Western metals speculants?
We are still observing China’s next moves in the copper market, as inventories at Chinese exchanges are booming while they are running low in the West. Meanwhile, our studies reveal that the physical demand in China is absolutely on the floor!
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EM Watch: The China bet and the copper story are both old hat by now
The short-term macro bet on the Chinese build-up of copper reserves seems more than exhausted. Cluster risks remain excessive in copper contracts maturing in July, while Lat-Am could be an interesting middleman bet in the meantime.
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Something for your Espresso: China’s profit cycle is improving
The Chinese profit cycle seems to be improving (from abysmal levels) and the big question is whether the export prices from China to the West will start to increase as a consequence.
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Something for your Espresso: Are we suddenly using AI as an excuse for everything?
The AI wave is suddenly used as an excuse for right about everything in equity markets to commodity markets to rates markets. Is that even fair?
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EM Watch: Have Copper markets been hit by a bus full of tourists or by the Chinese economy?
The front-month Copper bet has been extremely popular in recent weeks/months, but is the Copper market being run over by a bus full of tourists or by an actual increase in the demand in the global economy? All roads lead to Shanghai!
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Something for your Espresso: Chinese optimism prevails, but the CNY pressure is REAL!
Chinese equities and metal proxies continue to surge, but FX settlement numbers from April hint that the FX pressures in CNY space are very very real. Is it generally very expensive to decide on the “slow burning path”.
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Steno Signals #100 – China’s MAJOR power grab on Copper supply chains
The next few weeks will be absolutely vital in copper space as we will see whether China will offload Copper stocks to the West as they are currently paid to do. If they DON’T, we can conclude that China is building stock for strategic purposes.
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Something for your Espresso: A wedge in between the Chinese consumer- and producer..
China is exporting inflation again as the industrial production complex is starting to fire on all cylinders. Meanwhile, the consumer remains pessimistic in China and RE woes will leave CNY rates low.
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China Watch: No one has noticed that China is exporting INFLATION again..
The Chinese industrial production pace is back at pre-pandemic levels, while the stock market has never recovered. We are slowly but surely seeing a build up of momentum that could turn out to be very self-fulfilling.
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Something for your Espresso: Things are heating up in USDCNY (again)!
If the Biden admin moves the needle first in the flared-up trade conflict, China may decide to let go of the USD/CNY exchange rate in response. Things are heating up again!
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Something for your Espresso: Enjoy the breathing space while it lasts..
The weakness in Asian FX is back and there are signs of a bottoming in Oil prices. Will the breathing space only last until next week’s CPI report? Meanwhile, the UK could prove to be a US case T+6.
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Something for your Espresso: Sticky prices acknowledged right, left and center
The RBA echoed the Fed and sees sticky prices as a reason to remain on hold. The RBA has adopted a classic symmetrical stance, something that could spread across the G10, unless the growth picture stalls further.
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Something for your Espresso: A week of respite before the inflation numbers?
The US calendar is light in the week ahead, meaning that European central banks take center stage. Will high-beta assets continue to soar on hopes (expectations) of cuts?
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Steno Signals #98 – The recession panic is back right as liquidity is returning!
The recession narrative has returned after a series of weak PMIs. Betting against the returning recession hysteria has been a profitable strategy since April-2020, but will it be so again this time? Hallelujah!
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Steno Signals #97 – 5 reasons why the CNY will be devalued next week and how to trade it
The list of triggers for a material devaluation of the CNY keeps getting longer and action is probably imminent. The question is how markets will react to such an event and whether it will prove to be a new trend.
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Something for your Espresso: Waiting for the dust to settle..
The embedded value in risk assets is improving, but the USD wrecking ball will continue into this week. The question is whether we have imminent action ahead from the BoJ/MoF or the PBoC as a consequence.
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Steno Signals #96 – A major devaluation of the CNY could be imminent
China is preparing for something major. That seems increasingly obvious judging from the stockpiling of important resources. Could it be that they are preparing a major one-off devaluation of the CNY?
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Something for your Espresso: More USD strength is coming!
The strong Chinese GDP numbers were overshadowed by a continued weakness in Asian FX trends. Energy and metals typically continue to perform in such an environment.
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EM Watch: China is preparing something BIG!
The strategic shift from Real Estate to Green-tech manufacturing in China is very evident and it will likely impact Europe to a much larger extent than the US. Counterintuitively, it means that two of the strongest inflation hedges stem from China and Mexico simultaneously. Here is why!
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Energy Cable: Melt UP in commodities upcoming?
While we have booked profits in our long oil bets, we are getting increasingly bullish on the broader commodity complex. Especially a couple of metals look extremely interesting here.
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Something for your Espresso: Chinese deflation arriving in Europe but not in the US
The gap is growing between the US and peers. Both on inflation and unemployment. Will this lead to surprising rates decisions already this week? Meanwhile, we don’t think energy prices will drop because of Israel pulling out troops.
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Reflation Watch: Has Japan turned a page, and have markets gotten ahead of themselves?
The BoJ delivered a historical hike – its first in 17 years – last week. Does this mark the turning point for Japan for good, or do risks still linger?
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Explainer: the 3 faces of Chinese consumer pessimism
The Li Keqiang Index witnessed its most robust monthly surge since 2005 but consumer confidence is rotten?
Understand the paradoxes of the Chinese consumer in this explainer.
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Energy Cable #62: Biden is selling crude straddles, while something is cooking in China
This week we hone in on the consequences of the Ukraine’s successful attacks on Russian refiners and how to play it along with some thoughts on our profit taking in metal space as something BIG is cooking in China!
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Portfolio Watch: Data green-lighting continued rally – cautious metals however
China has been in the limelight recently, and the attention from clients match the evident rotation in managed positioning. While tremendously yielding, we’ve decided to de-risk in metals but keep overall cyclical exposure.
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