Black week adjustments in consensus forecasts look surprisingly small. We see great value in betting on a dovish surprise to the November inflation data from Europe. Here is why!
EUROPOLITICS WATCH: Opposition victory in Poland opens door for Ukraine in the EU?
On Wednesday, the European commission made a formal recommendation to start EU membership negotiations with Ukraine and Moldova. Now Ukraine must work to secure the endorsements of member states – not least Poland, who’s incoming government will be decisive for Ukraine’s future with the Union.
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Trade Alert: Dipping our toes in Europe
We anticipate that the economic cycle will defy current market expectations in Europe. Read below to see how we place our chips
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Portfolio Watch: Time to consider (EUR) bonds?
We barely dare suggest it. But are bonds finally reap for entry on the long side? We are definitely getting there. Read our latest Portfolio Watch below
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Positioning Watch: Who is caught in the Crossfire?
As we review the events of this eventful week, it unfortunately appears to conclude with a tragic development, as we find ourselves reporting on the potential beginning of yet another conflict.
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EUR inflation watch: Another couple of months of EASY disinflation on the cards
The EUR-inflation numbers will be helped lower by substantial base effects while we see weakness spreading across services-inflation. The bottom will likely be found in Nov or Dec at levels close to the target.
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EUR Watch – The ECB will soon reveal their true inflation vs growth preferences
We dive into the challenges ECB are (still) faced with, as headline inflation is likely to rebound from November and onwards, giving the ECB another – but bad – argument to keep policy restrictive. A hike seems like a done deal tomorrow, but what about the path for 2024?
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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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ECB Watch: Damned if you do & doomed if you don’t?
We have argued that risks of a more rapid disinflation in Europe are going under the radar. But as we get poor job opening numbers from the US, how do we assess the growth trajectory of the EZ and how will the ECB likely act?
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FX Watch: Everything that matters for EUR/USD is natural gas
Is the EUR resilience basically just down to a continued decline in local energy costs? Natural Gas prices have explained almost the entire volatility in the EUR since 2021 and with the tide starting to turn in energy space, it may be time to watch out in FX space as well. Here is the data!
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Positioning Watch – The market’s response to another Fed hike
The central bank week is over, and that means it’s time for us to have a look at how Investors and Traders perceived the Fed meeting and how they have adjusted their portfolios in response.
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Out of the Box #12: What if the deacceleration of EZ inflation starts to outpace that of the US?
We revisit the eurosceptic case to assess whether we have let our pessimism get the better of us. Or could Euro bulls still be in peril?
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SPAIN ELECTION WATCH: WHY SPAIN IS NOT THE NEXT ITALY
Could a right-wing government in Spain follow in the footsteps of Meloni’s crusade against the EU economic framework? Tensions are high as we gear up to the all-important General Election on Sunday.
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Something for your Espresso: The USD was killed alongside the CPI
If the USD got killed because of the CPI, the USD bulls will return with a vengeance once it gets increasingly clear that the CPI is getting killed in Europe, Australia and elsewhere within a few months from here, but something more structural might be brewing beneath the surface?
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Steno Signals #55 – Why surveys struggle to get anything right in this environment
Expectations are real, while the reality is nominal! Soft data keeps getting the reality wrong, which is probably a phenomenon that relates to the extreme spread between nominal- and real figures. Will this issue keep wrong-footing everyone?
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EUR inflation watch: 7 charts on EUR inflation ahead of the June CPI report
Base effects will be harder to beat in June than in May, but we see increasingly compelling signs of a sharp disinflation in Europe over the next 3-5 months. Here is a chart deck on the trends we find most interesting to watch in EUR-flation
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EUR Liquidity Watch – The ECB will have to punish governments more..
The ECB tries to incentivize governments to withdraw their funds from the ECB to mitigate a complete catastrophe when the QT race really begins at double speed from July and onwards. Will they succeed, and what will the ramifications be? Find out here.
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ECB Watch: 6 charts on how EUR QT impacts markets
Ahead of the ECB decision, we release our chart book on the connection between EUR liquidity and moves in EUR markets. The ECB is likely to ramp up QT from July onwards and TLTRO repayments add to the liquidity malaise.
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Out of the box #7 – A Fistful of Euros – The European Crossroads and how to trade it
We have not been shy about our euro skepticism lately (to say the least) but as we now trade it, I thought it only appropriate to add some broader context to it. The way I perceive and understand the Eurozone I owe much to the influence of Edward Hugh who is sadly not with us anymore. I had him in mind writing this piece
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Portfolio Watch #1 – Not your rookie market
As we close out our first week with a live portfolio, we are excited to introduce our new weekly watch piece, providing a comprehensive summary of our trading week. Every Friday, we will release this publication, and we extend a warm welcome to you all in this premiere edition!
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Something for your Espresso: Explicit pause or just a pause?
Will the FOMC minutes reveal whether a pause is on the table in June? Are more members worried about communicating that it is an explicit pause?
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Out of the box #3 – Italian banks the first domino?
While everyone is looking at Europe for safety we are taking the other side of the trade. The unbalances of the Eurozone haven’t gone away and with inflation & dark clouds on the horizon, we question whether an indebted fragmented economy can hold fast as the economic winds turn unfavorable. Lagarde is running out of bullets and fiscal ammunition is in short supply
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Steno Signals #48 – Markets vastly underestimate the impact on USD funding from the debt ceiling
The USD debt ceiling is a returning topic and it’s typically not overly important for markets, but this time is likely to be different. The repercussions for USD funding markets may be material and in sharp contrast to consensus expectations the USD may stage the biggest comeback since Lazarus.
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Something for your Espresso: EUR-phoria – it’s going up, up, up, up, up!
Another strong IFO report from Germany on the surface of it, but is the European economy close to rolling over from a momentum perspective? Let’s have a look at the details.
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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.
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5 Things We Watch: APAC-inflation, The New BoJ Governor, US Wages, Green Shoots and Natural Gas
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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The Dollar O’ Meter #1 – 5 ways to gauge the USD outlook
The importance of the dollar and its influence on almost any given asset will come to nobody’s surprise, especially after its tear in 2022, which was like a wrecking ball, wreaking havoc in and around the financial system. Therefore we are launching the Dollar O’ Meter to track the USD versus peers.
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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.
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