Ultimately markets got the memo from the Fed. The rate hikes are not necessarily over, but they will not promise anything at this stage. USD bullish (again).
With Central Bank rate decisions taking headlines this week, we have a look at the 5 things we watch in global macro, and give you our take on FOMC, BoE and more.
Given the information received since the last update of the dot plot in June, inflation has surprised to the upside, the growth gauges have surprised to the upside, while the labor market has surprised to the downside. Net/net no reason to alter the dot plot.
We are well under way in our Services Week with our focus on Services and in this note we wanted to highlight the issues central banks could face in a scenario in which manufacturing outpaces services.
Ahead of the CPI release tomorrow we zoom out to provide you with the bigger picture and what to watch out for in global macro over the next weeks.
We’re skeptical of the “data-dependent” rear-view mirror approach by the FED & ECB. Refuting to provide guidance is one thing but are they listening to their crowds and acknowledging the differences?
The Fed is getting increasingly confident that they can orchestrate a soft landing as the recession is no longer a base-case for them. Meanwhile, ECB and Christine Lagarde are losing confidence by the week.
It’s central bank week again, and that of course means that we provide you with all you need to know ahead of the big meetings. Recent inflation numbers have pause written all over it, but will central bankers keep their hawkish tone?
Everything points to a 25 bps hike and then a pause from the Fed at today’s FOMC meeting so where does this leave us historically and what do we think about the outlook? Time for a Fed pause watch!
The big three central banks meet this week and we find a 25bp hike given for both the Fed and the ECB with limited forward guidance due to a lack of updated projections. It will prove to be an outright shocker if the BoJ moves the needle this week.
Just in: A brief account of today’s US CPI report.
Emergency lending facilities provided by the Federal Reserve, and the BTFP in particular, relieved banks in distress and helped them stay afloat, but are the same risks still lurking or has the need for funding eased?
We are back to the good old discussion on whether eight straight months of manufacturing contraction equals a recession or not. The jury is still out, and equity markets have not received the memo yet in case. The ISM Services will be a guiding star, but not a decisive one.
Pheew… close call! The bipartisan debt ceiling bill saved the U.S from economic disarray. Now we can all take a well-deserved summer holiday and bask in the sunshine of the long-term financial stability ensured by responsible lawmakers who have no interest in short-term solutions nor gains. But no – not so fast! We still have a looming government shutdown to attend to.
5 Things We Watch – The AI bubble, EUR Liquidity, Pivot hopes, the bull case for markets and UK Inflation
With the recent central bank bonanza, pivot hopes and the ongoing rally in equities, there are plenty of things to take a look at in this week’s edition of ‘5 Things We Watch’. Follow along, as we share our thoughts on what to look out for in the weeks to come.
The Fed is not on pause. That is at least the message they try to convey to markets, but data will decide, and we have no concrete guidance on the path ahead. A well-orchestrated pause has an embedded hiking bias.
Welcome to the Central Bank Bonanza with meetings of both the Fed, the ECB and the Bank of Japan. We’re covering it all live here on stenoresearch.com. Ask your questions below!
The RBA and the BoC have given the global macro community a LOT to think about ahead of next week’s plethora of major central bank decisions. Is the Fed hike back on the table?
BoC and RBA have hawked up the sentiment again, while forward-looking indicators point in the other direction. Here are the FIVE things we watch right now in global macro!
Something for your Espresso: Saudi Arabia wants a fight with Biden, but they don’t have the upper hand
Saudi Arabia once again attempts to gain the upper hand in the oil-market, but struggle to get the momentum going. Meanwhile, this week’s data may look like Goldilocks is back in the making,.
IFO seems to have peaked, and Germany likely already is in some sort of recession. Will the ECB care? And will EUR + DAX bulls care? FOMC Minutes reveal increasing divergence of views within the board.
A pause is now the clear base case. The regional banking stress is now more equity/credit driven than deposit driven, which will be harder to backstop for the FDIC and the authorities. Will the ECB sound dovish?
We suspect both Powell and Lagarde to be content with today’s releases but perhaps the cycle fools everyone again?
We expect the Fed to deliver the last hike in this cycle, while the ECB is likely to deliver a dovish hike on Thursday. A big week ahead for central banks!
Out of the box #1: The “mystery” of the growing US deficit and why it is likely going to lead to lower interest rates
The US budget deficit is a whooping 7.5% of GDP worse than what it should be given the healthy employment and growth numbers of the economy. Is the Inflation Reduction Act running wild or what’s going on?
The unwavering strength of the labor market has backstopped the probability of a classic recession, but is data now finally beginning to show what we have all predicted?
Peak inflation is in, but monetary policy works with “long and variable lags” as monetarists say. While Goods inflation is sliding, some areas are resilient and services inflation remains an issue. Even though expectations and soft data are perplexing, there are pockets of data indicating a fight-back to the weakening dove sentiment.
When it comes to the debt ceiling, politicians are not the only ones asleep at the steering wheel. Political commentators, too, seem freakishly calm telling folks that Congress *eventually* has to reach a settlement on raising the debt ceiling. While I don’t disagree with the end-result, it is astounding how few are concerned with the likely government crisis that will unfold before a deal is struck. We are underestimating the power of the Freedom Caucus and overestimating Biden’s willingness to avoid a government shutdown. The cocktail is putting the U.S. on a path towards debt brinkmanship.
Inflation is already slowly but surely losing its limelight as the main concern for central banks for good reasons. No one will talk about inflation in 6 months, if forward looking indicators are right.
It is the big NFP day, which will keep market participants busy on Good Friday. Here are the four labour market charts of relevance ahead of the release. We see DOWNSIDE risks to NFP.