Ueda giving an exclusive interview for the first time since April trying to talk up the JPY but will he succeed? We doubt it. The global steepener pressure remains intact.
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
No one really knows what the ECB intends to do after the flip-flopping yesterday, but even in Europe it is probably safe to say that we are swiftly edging closer to the peak of this hiking cycle. Meanwhile, evidence gathers in USD markets that the Fed should move with a cut next.
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.
It is safe to say by now that Powell has been a key person behind orchestrating the coordinated global central bank message of “peak inflation”. The bar is VERY high to price the Fed more aggressively than now.
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!
Today is a big day for the “rebound bet” as PMIs are out in Europe and in the US. We understand why markets expect a rebound in activity but find the risk/reward lackluster in betting on it.
Is the EUR swap market prepared for what’s coming in 2023? We find that the market is yet to understand how hawkish Lagarde intends on being in Q1/Q2. Here is what our models tell us…