The trend shift in fixed income is remarkable and sharply contrarian to the post-Trump consensus. We expect more of the same ahead, coupled with a firm decision by the Fed to support liquidity in December. Meanwhile, gold may see a catalyst.
China/Germany Flash Watch: How will China navigate the Trump victory?
The Trump trade is roaring in financial markets, but how will China navigate the turbulence? Should we expect a major fiscal announcement on Friday, or perhaps a conciliatory approach to try and avoid tariffs? And what is happening in German politics?
China Watch: This is NOT stimulus. It’s a debt swap!
The stimulus being prepared by the NPC for announcement next week seems more like the work of a marketing agency than an economic council. While the numbers are substantial, it’s more of a debt swap than a true stimulus package. Here’s why!
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Steno Signals #122 – Markets have abandoned the cutting narrative (outside of EZ)
We are left with a market pricing that mostly considers 50bp cuts a feasible scenario in the Eurozone, but the ECB is not a 50bp central bank, especially not if its peers aren’t moving that fast.
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Something for your Espresso: PBoC underwhelming in many ways, but markets are ripping
The PBoC remains underwhelming, while the consumer in the West is showing strong signs of momentum in both the UK and the US. But is that momentum carrying through October? More frequent data is starting to cast doubt on it.
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Steno Signals #121: Whatever It Takes—In the US, but NOT in China
While the Chinese fiscal briefing was a huge nothing burger, we are starting to see pockets of the USD-denominated asset space behaving as if a USD “whatever-it-takes” moment is just around the corner.
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Portfolio Watch: China needs to deliver, or it could end in tears
While we await the Chinese fiscal briefing, we are beginning to see some interesting tradable trends in USD and EUR assets. The gap is widening again, and EUR rates remain far from neutral.
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Portfolio Watch: The outlook is brightening into October
There is currently an almost goldilocksy vibe in the air, which could continue throughout October. The outlook is brightening short-term and we are loading up on risk.
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Steno Signals #115 – The head-fake business cycle strikes again
The manufacturing rebound in H1 2024 was another head-fake, and we were correct in predicting that everyone would call off the recession. Now, the market is likely going to “reprice” the recession risk again.
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EM Watch: 5 Charts on the Nosediving Chinese Indicators!
The Chinese momentum has come to a sudden halt, and we think it is related to the front-loading of imports due to tariff fears. Could China become the victim of a wait-and-see approach until after New Years?
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EM Watch: Why China is trying to wreak havoc on your Gold longs
The Fed looks likely to commence a cutting cycle in September, but can we use the typical cutting cycle playbook in EM- fixed income and Commodities? China is (potentially) wreaking havoc with the playbook!
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Energy Cable: The demand outlook in China is dreadful to say the least …
The local demand in China remains on the floor, which is an issue for the broad commodity bet with China typically being the largest net consumer. China is exporting a lot, but they are not (yet) raising prices. It may eventually arrive and we remain on PPI Watch accordingly.
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Something for your Espresso: The Gold Rush Continues!
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.
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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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