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!
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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Something for your Espresso: Punching in thin air!
Markets have been choppy with the Americans away from their desks due to Juneteenth. Are commodity bulls punching in thin air ahead of July? Meanwhile, we have a big day ahead in central banking.
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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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Steno Signals #103: A blood-bath in metals in July!?
There is a material cluster risk in metals ahead of July deliveries and the consensus remains alarmingly upbeat in Gold, Silver and Copper. Here is why it could turn into a July bloodbath in metals.
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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: Second-guessing the next (growth) narrative
It’s make or break time for the US economy as the “recessionistas” are back in the driver’s seat ahead of the ISM Services release. Rates markets will be monster sensitive to the release later today.
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Energy Cable: OPEC needs a big rebound on the demand side
The OPEC group continues to keep the supply of oil artificially low, but the big question is now the demand side of the equation. This OPEC policy is bullish, if the demand side keeps improving.
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Something for your Espresso: Troubled waters ahead the next 2-3 weeks
The liquidity outlook is murky at best for the next 2 weeks, which is starting to take its toll on risk markets as it is paired with continued re-inflationary vibes.
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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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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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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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Energy Cable #60: Copper getting some help from China?
The Chinese moves toward larger fiscal deficits may be helpful for the energy- and industrial metal cases, but we still lack confirmation from the actual manufacturing cycle globally. Could the commodity complex be the macro case of 2024?
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Commodity Watch – A rebound in the most cyclical asset class?
With the possibility of the manufacturing sector rebounding, commodities might be in for a ride as demand increases in a tight market.
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EM by EM #3 – Copper comeback?
In Q1, we had a long position in copper. However, since our exit, industrial metals have experienced a reversal, and most of the gains YTD have been wiped out. But could the copper story have another leg to it? In this piece, we will share our perspective combining the macro with the development from the relevant EM frontlines.
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Commodities Watch – What commodity super cycle?
The Chinese reopening has possibly been the most covered topic since its announcement in late 2022 – at least in financial circles. The awaited lifebuoy for the global economy, which the reopening consensually was thought to be, has yet to truly show up in prices of commodities essential in manufacturing. We prefer to stay long Industrial Metals (mainly Copper) relative to Energy.
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5 things we watch: Bank of Japan, the falling USD, Dr Copper, the ON RRP and China vs. India
Every Wednesday our Head of Research, Andreas Steno, goes through the 5 most important themes/charts in global macro right now and how we assess them. Enjoy!
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