Fed Watch: 25bps that they will woefully regret

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.

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Something for your Espresso: Will anyone care about inflation amidst this mess?

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.

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Steno Signals #38: Is this good or bad inflation?

Steno Signals #38: Is this good or bad inflation?

There are undoubtedly signs of inflation pressures resurfacing in leading indicators, but remember that activity leads inflation. If inflation returns (from a momentum perspective), it is because activity has picked up markedly ahead of it. That is not bad news.

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Inflation Watch: Is the inflation momentum back before it even disappeared? 5 Pros and 5 Cons

Inflation Watch: Is the inflation momentum back before it even disappeared? 5 Pros and 5 Cons

Some early indicators of inflation have started to show worrisome signals 4-6 months down the road, which may lead to a resurfacing of inflation trends before the first battle is even won. Is the double-top inflation narrative warranted? Let’s have a look at pros and cons.

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5 things we watch – Fed policy, positive carry, oil markets, the USD, and implications of the newly appointed BoJ Governor

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!

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Good Morning, America: Not a disinflationary biggie

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!

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Inflation Watch: Is the inflation momentum back before it even disappeared? 5 Pros and 5 Cons

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.

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Something for your Espresso: Will anyone care about inflation amidst this mess?

Something with your Espresso: It is getting hot down under, which will put pressure on BoJ AGAIN

Morning folks Smoking hot CPI report out of Australia. Good news for our AUD longs and a cementation of a too dovish pricing of RBA currently peaking at 3.75% in Q3. If the RBA were to copy/paste the playbook of the Fed or the ECB and aim for positive real rates… Oh boy a repricing that would prompt. We wouldn’t rule out such a repricing since we find that the APAC inflation cycle lags Europe and the US. Europe’s energy woes increased price pressures on Natural Gas in the APAC region with a time-lag, and this is one of the reasons why this region is now under inflation scrutiny. This is of relevance for Bank of Japan as well. Australian CPI empirically leads Japanese CPI by 3 months, which leads us to the conclusion that Japanese inflation is headed for 5-5.5% in the next 3-4 months. Quite a backdrop for a new Governor in BoJ and a HISTORICAL chance to at least partly scrap the YCC. Bring on speculation about a change of policy via the JPY release valve again. Chart 1. Australian CPI leads Japanese CPI We saw a decent bounce in both US and European S&P PMIs, but no one really cares about them, since the Leading Economic Indicator (LEI) out earlier this week points to ISM Services clearly below 50… Yesterday’s market reaction was also telling with no positive reaction to the rebound in PMIs, since the crowd was CLEARLY leaning that way ahead of the PMIs. […]

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Steno Signals #27 – The tanned grinch

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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