It seems like the JPY move has triggered a cross-asset position squaring, meaning you need to be aware of whether a trade is popular or not. Interestingly, the curve is steepening in the meantime.
Portfolio Watch: No respite for Asian FX.. How to deal with it?
The accelerating USD vs Asian FX trends will impact markets across assets into next week. What’s cheap and what’s expensive if the CNY is getting devalued in the coming weeks?
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Something for your Espresso: More USD strength is coming!
The strong Chinese GDP numbers were overshadowed by a continued weakness in Asian FX trends. Energy and metals typically continue to perform in such an environment.
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Something for your Espresso: A deflation shocker from the UK?
Will the UK inflation report surprise on the low side on Wednesday? Our models are very dovish compared to consensus. We also await the decision from the BoJ but find JPY to have entered a structural uptrend here.
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Something for your Espresso: Time for a cup of milk in Frankfurt?
The dovish arguments keep piling up in the Eurozone, yet the Federal Reserve seems much more open to discuss potential changes to monetary policy in 2024. The ECB fears moving ahead of the crowd, even if they have a strong case.
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5 Things We Watch: BoJ, JPY & CNY, Monetary trends, UST selloff & Biden’s visit in Israel
While tension keeps mounting in the Middle East, we’ve decided to broaden the global macro-horizon. From rising pressures in Japanese policy and the preceding Asian currencies to monetary trends in EUR and USD, and everything in between. We break down this week’s most noteworthy developments.
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Japan Watch: Time to care about the BoJ again!
The BoJ will have to revise the inflation forecasts UP again later this month ultimately signaling that inflation will be above 2% for the next two years. Global bond markets should start to care about the BoJ again!
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FX Watch: The world needs a Riyadh accord more than a Plaza Accord 2.0
Lots of talk around a too-strong USD, especially in Asian markets. The issue is that the move in the USD is driven by BOTH monetary policy and relative energy balances. It is hard to make a Plaza Accord without a Riyadh accord.
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Something for your Espresso: A trial balloon from Ueda
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.
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Macro Regime Update June – Falling inflation in the limelight with wobbly liquidity
Our monthly update on our asset allocation framework is out. We track down liquidity, inflation, and growth in all major economies. Inflation is currently stealing the show as liquidity remains wobbly. Remain long the disinflation theme.
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Something for your Espresso: The last hike in this cycle?
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!
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Something for your Espresso: 1-1.5 years of inaction? Not so fast
The Bank of Japan left us in the dark on whether monetary policy is now on autopilot for 1-1.5yrs, while a committee figures out how to exit the YCC program. Changes to the statement suggests that the policy CAN be changed.
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Something for your Espresso: EUR-phoria – it’s going up, up, up, up, up!
Another strong IFO report from Germany on the surface of it, but is the European economy close to rolling over from a momentum perspective? Let’s have a look at the details.
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Something for your Espresso: Disinflation confirmed unless you are transporting stuff
The inflation report made for benign reading for monetary policy doves as a slightly more broad-based disinflation picture is starting to emerge. Will the Fed acknowledge the trend and pause in May? We think so.
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Japan Watch: The Flight Back Home
Japan remains a MUST watch as a risk taker in the West. With the potential scrapping of the YCC policy and the recent recall of capital to domestic markets, could this be a potential time bomb for Western markets? Here is how we monitor the situation.
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Something for your Espresso: Nothing Burger Ueda
We have been up early to watch the hearings in Japan, but very little new was brought to the table. Here are the take-aways from the hearings in Japan.
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Japan Watch – The YCC time bomb for Western Fixed Income
Japan is a MUST watch as a risk taker in the West as the potential scrapping of the YCC policy holds true time bomb potential for Western markets. Here is what is currently priced in and how to position for it.
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Good morning, America: Kazuo Ueda – who?
Is Kazuo Ueda another trial balloon from the Japanese government or is this a confirmation that politicians seek a break-up with the ultra-loose policy of Kuroda?
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5 things we watch: The cyclical upswing, energy inventories, the BoJ governor, higher for longer and the consumer
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!
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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.
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Bond Watch – Kuroda the rug-puller.. What is priced in for BoJ?
It is a BIG week in Japanese central bank history with widespread speculation of another increase to the trading range of 10yr JGBs in the yield curve control program. More than 35 bps are priced in, but will BoJ fail to deliver?
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