The price action on Friday started to resemble the lockdown-driven liquidity event of March 2020. Here’s your guide to assessing whether we’ve entered a similar liquidity event in the week ahead — a must-read.
Steno Signals #176 – Will 2025 be 2007 or 2021 all over again?
Markets are back discussing inflation fears ahead of 2025, but is it really such a big thing? The outcome space for 2025 is huge and I am personally torn between the 2007 and 2021 analogy for now.
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Steno Signals #113 – Neither Inflation, Growth, Nor Liquidity is rising right now
We track the probability of rising growth, inflation, and liquidity momentum in real-time on a daily basis, and the developments since the start of July have been notably weak. This is the kind of setup needed to prompt central banks to restart their actions.
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Portfolio Watch: Cracks are appearing in the lagging cycle
Retail sales have once again alleviated immediate recession fears, but signs of cracks are appearing in sectors that typically lag the business cycle, including construction. Consumers remain concerned about the economic situation. Bonds are holding steady for now.
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Something for your Espresso: Inflation time!
The inflation reports are incoming over the next 24-48 hours and markets are in a wait and see mode ahead of them. We forecast another hot PPI report today!
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The Week At A Glance: Soft Inflation, accelerating Nat Gas and input costs..
We have a big inflation week ahead of us with US PPI & CPI inflation paired with final details from Europe. Meanwhile, we are watching the situation in Ukraine/Russia and the Nat Gas market.
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Steno Signals #112 – Liquidity is BOTTOMING
Liquidity is stabilizing, and there are already signs that August will be better than July. We are aware of the risks in the labor markets, but we see strong signs of a cyclical bottom here, which may soften the impact of the uptick in unemployment.
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Steno Signals #108 – A messianic Donald
All talk about Biden will likely fall silent after the attempted assassination of Donald Trump. Will a “Messianic” Trump impact the markets in the weeks ahead? Meanwhile, the hot PPI report on Friday served as a friendly reminder to still care about inflation.
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Portfolio Watch: Be our guest to jump the great rotation bandwagon
The PPI serves as a friendly reminder of the cyclical dynamics brewing beneath the surface of the global economy, which contrasts with the current sentiment. We are not convinced of a major slowdown, but we obviously find insurance cuts more likely than a few weeks ago. Here is how to play it..
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Something for your Espresso: Gung ho or no?
The inflation report holds the potential to fuel the liquidity beta risk party further, and if we take clues from China, we ought to expect a soft(ish) report. The tide needs to turn on USD vs Asian FX to truly alter the picture.
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Steno Signals #106 – The cycle is improving. Not weakening.
It seems like old hat to discuss the weakness in labor markets as the cyclical vibes are getting stronger out of the high-beta economies globally. Will the US cycle follow suit?
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Inflation Watch: What if the cyclical prices are not truly tamed? Lessons from Canada and Sweden
The debate on whether this is a Burns or a Volcker-like scenario rages on, but re-inflationary forward-looking indicators are increasingly coming to light. This is particularly evident in countries that have already cut interest rates.
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The week at a glance: UK CPI report is taking the headlines together with Le Pen
Will the UK Service inflation finally soften? The consensus once again hopes that service prices will de-accelerate in the UK, while Le Pen is trying to pour oil on troubled waters in French fixed income.
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Something for your Espresso: Things you do not see during a disinflationary slowdown
If we are indeed experiencing a slowdown, it is not the typical one characterized by clear disinflation. The job report from the UK this morning reminds us that this is not an ordinary disinflationary slowdown.
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The Week at A Glance: Everything you need to know ahead of the FOMC and CPI
The Fed will have to deal with a backdrop that is more hawkish than anticipated on most major parameters. Will they dare to continue highlighting a couple of cuts this year?
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Steno Signals #102 – Bad inflation news everywhere
We are getting unpleasant inflation surprises across the West again and the progress on inflation has even stalled in the Euro area. Can the consumer survive a prolonged period of inflation?
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Something for your Espresso: Troubled waters ahead the next 2-3 weeks
The liquidity outlook is murky at best for the next 2 weeks, which is starting to take its toll on risk markets as it is paired with continued re-inflationary vibes.
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Something for your Espresso: The missing link is on the move..
Inflation expectations could be on the move if the recent trends in energy space persist. Energy has been the missing re-inflationary link in recent weeks, but there is momentum ahead of the virtual OPEC meeting.
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Steno Signals #101 – Introducing the Washington DC Crypto Put!
The full-blown underpinning of crypto by Donald Trump increases the probability of pro-cyclical fiscal- and monetary policy. Ensuring a floor under Crypto developments is of utmost relevance ahead of the election for Biden.
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Something for your Espresso: May data is way better than April data
We are getting confirmation for our “soft patch” thesis in April from data releases right left and center. PMIs are improving and May data will generally look much better than the soft data from April.
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Inflation Watch: Freight rates to reach 2022 levels impacting goods-inflation?
Freight rates are on an absolute tear and the question is now to which extent it will impact the inflation basket of Western countries. The shipping malaise opens the door for a bullish TTF Nat Gas setup!
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Something for your Espresso: Crypto(pti)-mism is back!
The sudden optimism around the ETH spot ETF approval has reignited Crypto optimism. Another sign that monetary policy is probably not overly tight here and that liquidity is flowing still.
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Something for your Espresso: Chinese optimism prevails, but the CNY pressure is REAL!
Chinese equities and metal proxies continue to surge, but FX settlement numbers from April hint that the FX pressures in CNY space are very very real. Is it generally very expensive to decide on the “slow burning path”.
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Something for your Espresso: A wedge in between the Chinese consumer- and producer..
China is exporting inflation again as the industrial production complex is starting to fire on all cylinders. Meanwhile, the consumer remains pessimistic in China and RE woes will leave CNY rates low.
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China Watch: No one has noticed that China is exporting INFLATION again..
The Chinese industrial production pace is back at pre-pandemic levels, while the stock market has never recovered. We are slowly but surely seeing a build up of momentum that could turn out to be very self-fulfilling.
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NFIB Watch: 5 KEY charts from the best survey on the US economy
Here are the main take-aways from the most important survey in the US economy.
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Something for your Espresso: Is Bailey making a “Powell”?
The GBP rates case is heating up again as both price plans- and wages are probably re-accelerating. Have markets completely mispriced the GBP rates case? It feels VERY reminiscent of late Q4 in the USD rates space.
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Steno Signals #99 – Freddie Mac gearing up to unleash trillions for consumption?
As the pool of excess savings seems to be eroded, Freddie Mac has put forward a suggestion that holds the potential to unleash trillions of dollars. Will the US consumer fire on all cylinders again?
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Something for your Espresso: Necessity-flation is RETURNING
Signs of re-acceleration in food- and energy prices are present in many G10 countries, which may be a strong hint ahead of the USD inflation report next week.
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Something for your Espresso: USD/Asia is already bid again…
Despite basically all short-term factors pointing in the direction of a softer USD, we are starting to see bullish price action in USDJPY and USDCNY again. What is going on?
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