When Fed Chair Powell goes on stage tonight we of course stay on the line for live coverage of the interest rate decision and the following speech. Get prepared and follow the meeting with us, as well as getting the best takeaways here on our live blog!
Something for your Espresso: No one’s willing to address the root cause yet
It is Fed day and the last few days of increasing market stability will allow them to hike interest rates. The question is if Powell will decide to address the root cause of the deposit flight… Fed Funds is too high relative to bank deposit rates.
Fed Watch: 25bps that they will woefully regret
The FOMC will likely decide to raise the Fed Funds target range by 25bps and regret it soon thereafter on Wednesday. Everything but the banking sector stress screams higher interest rates, why the Fed will attempt to regain control of the narrative.
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.
5 Things We Watch: Fed rhetoric, Chinese rebound, Chinese inventories, US labor market and a record-breaking yield curve inversion
Midweek has arrived and that calls for a rundown of the five things we watch the closest. As is the custom every Wednesday, we will take you through these most important themes (and charts) in macro and summarize how we interpret them.
Something for your Espresso: Powell the flip-flopper
Powell is back as the hawk we knew from 2022, but the extreme data-dependency is volatility creating by design. One soft inflation and/or job report and we will back at where we were just a few weeks ago. Buckle up.
Something for your Espresso: Bostic keeps the disinflation narrative alive
Bostic from the FOMC surprisingly hinted of only 25bp steps and a pause this summer. This is a surprise and something that will be tested unless price pressures fade fast this spring.
Seasonality Watch: Four charts that will make you go hmm…
Our working hypothesis continues to center around the current inflation pick-up resembling the September report from 2022 (released in October). Here are four charts that will make you go hmm…
Something for your Espresso: No food for 50bp in meeting minutes
A few participants favoured a 50 bp hike at the last meeting, but the overwhelming majority backs a strategy where a slowing pace allows the Fed to gauge the extent of hikes needed. Forget about 50bps in March.
USD’O’Meter #3 – Continued USD weakening ahead based on our probability weighted models
What is the USD outlook given current liquidity gauges and economic conditions around the globe, you ask? Well that is why we have the Dollar O’Meter where we’ll look at the USD through different lenses.
5 things we watch – Fed policy, positive carry, oil markets, the USD, and implications of the newly appointed BoJ Governor
Midweek has arrived and that calls for a rundown of the five things we watch the closest. As is the custom every Wednesday, we will take you through these most important themes (and charts) in macro and summarize how we interpret them. Dig in!
Good Morning, America: Not a disinflationary biggie
The disinflationary vibes are not tattooed all over this inflation report despite a cooling yearly inflation pace for the seventh consecutive month. BUT.. do note that Powells target variable keeps cooling!
US inflation watch – Charts, charts, charts
With the recent almost farcical economic data coming out of the US, we bet economists and traders are on the edge of their seats awaiting the coming CPI-print. In this ‘preview’ we’ll turn to our charts trying to align expectations to select indicators.
“LIAR!” – What did Biden’s State of the Union signal about upcoming debt ceiling negotiation
Tuesday’s State of the Union address gave little cause for optimism that a looming debt crisis in the U.S. can be avoided. Speaker Kevin McCarthy, seemed as powerless as the day he was elected and Biden certainly didn’t make his life any easier.
Something for your Espresso: 5% wage growth in Japan
The RBA echoed rhetoric from other central banks and will frontload a few hikes while assessing the “extent” of damage done to the economy of former lags. The question is now if Powell rocks the boat on the coordinated central bank rhetoric today.
Good Morning America: Wow, just wow!
An eight-sigma beat on non-farm-payrolls for it to print at 517k versus expectations of 188k. What is going on?
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.
U.S Debt Ceiling Countdown #1 – USD liquidity to be added before the big political stand off
On Thursday, the U.S. hits its 31.4 trillion-dollar debt limit. If Congress fails to raise or suspend the limit, the U.S. risks defaulting on its foreign debt with global economic ramifications. So naturally, Steno Research is launching a new ‘U.S. Debt Countdown’ watch series to keep tabs on when the U.S reaches the magic ‘X Date’: the day when The Treasury runs out of ‘extraordinary measures’ to postpone the worst-case scenario, and must succumb to default.
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 #26 – Stealth QE through the back door?
Is it really a possible scenario that the Fed will do stealth-QE by summer 2023? And are equities still a sell based on USD liquidity plumbing? Get the answers here!
Steno Signals #20 – NO soft landing unless central banks admit to disinflation
It is hard to find a single inflation indicator not rolling over, but there is ONE and that will be tricky to handle for the Fed. Meanwhile, European energy supplies are MUCH better than feared!
Steno Signals #8: Outright deflation risks in 2023 are increasing
The current supply squeeze is one of the worst seen ever. The disconnect between demand fundamentals and food- and energy prices is simply eye-catching. Watch the downside, but not yet.
Steno Signals #7: Duration is getting killed across all asset classes
Duration has been “killed” by financial markets over the past year, which carries repercussions for all asset classes. How can you track duration across assets and is the duration sell-off over?