Goldilocks data keeps coming from the US economy, while the ECB rhetoric hints of the hiking cycle potentially already being over. Here are our take-aways. The steepening will CONTINUE as the cycle is (almost) over.
Something for your Espresso: Is the ECB even aware of the banking crisis in the US?
The US inflation print yesterday would have been a CLEAR 50bp data print, but markets and we remain convinced that the credit event will force the Fed to rethink. The ECB is, on ther other hand, not awake yet.
Something for your Espresso: Will anyone care about inflation?
The market is convincing itself that the hiking cycle is over in the US, but will anyone care about inflation today? Long gone are the calls for higher(er) for longer(er) and the curve is steepening fast.
Something for your Espresso: Finally signs of China rebounding
The Chinese manufacturing sector rebounded in February and the composite PMI is booming, which will be a new booster for China sensitive equities and commodities. Rates will likely continue up alongside it.
Good Morning America: A global coordinated “inflation has peaked” narrative from major central banks?
The extent of hikes will now be 100% data-dependent and guided by how lags of former hikes will hit the economy in both the US, the UK and the Euro zone. This almost felt like a global coordinated “inflation has peaked” narrative from central banks. What are the ramifications?
Something for your Espresso: Powell BLEW it! Lagarde will not!
Weaker USD, lower rates, performing equities and credits. Powell blew it if he truly wanted to push back on loosening financial conditions. The Fed is now talking about the extent of hikes instead of the pace of hikes, which is an open door to a pause already in March. Position accordingly, not least as the ECB has a rare opportunity to “hawk things up” further.
Steno Signals #31 – The recession that EVERYONE agrees upon
Everyone agrees that a recession will hit this year, but will the Chinese reopening wreak havoc with the very uniform positioning across assets? Our flagship editorial Steno Signals is out every Sunday at 14 CET / 08 ET
Steno Signals #27 – The tanned grinch
Lagarde starred in the role as the slightly more tanned Grinch as central banks decided to ruin Christmas. Structural liquidity doesn’t look too bad and 2023 is not necessarily the year of the bear.
Steno Signals #6 – Is growth no longer relevant?
Inflation runs markets currently as it seems as if growth has become irrelevant for policy makers, but will such a narrative pass a reality test? I doubt it. Growth will re-enter the limelight soon!
Stenos Signals #2 – Why the Pandemic is about to get disinflationary
The current inflation is mainly a result of lagged consequences of the pandemic trends, but as these trends are about to reverse, we may experience the disinflationary part of the pandemic soon.