The monthly money growth in Europe continues to look dire. Will it impact GDP with a time-lag as per usual? Then 2024 looks, ahem, recessionary.
5 Things We Watch – US CPI, Japan, Positioning, Fed Borrowing and Oil
With the US inflation report coming in later today, we have a look at the 5 things that we are keeping an eye out for in markets.
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Bank Funding Watch: The lender of ‘favorite’ resort?
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?
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Something for your Espresso: Are these ISM numbers recessionary?
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.
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Steno Signals #55 – Why surveys struggle to get anything right in this environment
Expectations are real, while the reality is nominal! Soft data keeps getting the reality wrong, which is probably a phenomenon that relates to the extreme spread between nominal- and real figures. Will this issue keep wrong-footing everyone?
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Something for your Espresso: While we are waiting for Godot (and Inflation)
Risk appetite is back in markets while we wait for June inflation numbers in Europe. The big panel discussion at the Sintra conference will be closely watched today.
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EUR Liquidity Watch – The ECB will have to punish governments more..
The ECB tries to incentivize governments to withdraw their funds from the ECB to mitigate a complete catastrophe when the QT race really begins at double speed from July and onwards. Will they succeed, and what will the ramifications be? Find out here.
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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.
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ECB Watch: 6 charts on how EUR QT impacts markets
Ahead of the ECB decision, we release our chart book on the connection between EUR liquidity and moves in EUR markets. The ECB is likely to ramp up QT from July onwards and TLTRO repayments add to the liquidity malaise.
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US Debt Watch: Who’ll absorb the blow?
An agreement on lifting the statutory debt ceiling has been made, and the treasury general account now has to be replenished by issuing new debt. What does that imply for financial markets, and is the outlook as bleak as some pundits claim?
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Out of the Box #6: The Europeanization of the US banking system is on its way!
A WSJ article suggested that US banks will be required to hold up to 20% more capital should the Basel rules be fully implemented by 2025. The Fed is likely to present a new direction for regulation by the end of this month according to sources. How severe is this? Here are the numbers..
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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Steno Signals #51 – Bye bye inflation, hello lay-offs? Here is what to trade..
When headline inflation wanes fast, real wages grow, while corporate profits shrink. This is now the base case for H2-2023 while Chinese and Turkish political developments MUST be watched from a macro perspective. Here is why!
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Something for your Espresso: The bond bearish ghost that refuses to leave
Canadian CPI reignited some of the bond bearish fears in markets and Fed speakers are yet to completely throw in the towel on the hiking cycle. The pause is the base case, but weaker data is needed to fully convince central bankers.
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Something for your Espresso: “Only one week left”
Kevin McCarthy has initiated the blame game in the debt ceiling debacle to try and increase Joe Bidens incentives to strike a deal ahead of a partial shutdown. Our game-theoretical analysis has long put the partial shutdown as the base case as both Joe Biden and the right wing of the Republicans have limited incentives to strike a deal ahead of time.
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The Energy Cable #18 – Dwindling USD liquidity and Oil
Few markets have shown ambiguity like energy markets have, and the ghost of 2022 still haunts many investors deterring them pulling the trigger. Is a sequel brewing, or will the deterioration continue? We present to you two different takes on the matter.
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Macro Regime Indicator: The global liquidity outlook is worsening..
We have updated our liquidity models and found a relatively firm shift from benign- to tighter liquidity conditions ahead in May and June. How will changing liquidity impact markets in USD, EUR, JPY and CNY? Let’s have a look at it.
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Steno Signals #46 – Liquidity is drying up fast! Sell in May and go away?
We have been bullish on equities through the year but now see increasing signs warranting a defensive shift in positioning. Liquidity is drying up both in Europe and the US, and BoJ has effectively made further liquidity adding interventions unnecessary. China may be the only place on earth with positive liquidity trends.
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Something for your Espresso: Debt ceiling deal upcoming?
McCarthy secured a symbolic win in the House, which arguably increases his bargaining power against the Democrats. The question is whether this increases or decreases the possibility of a debt ceiling deal short-term? Meanwhile, Deutsche Banks Q1 report poured oil on troubled waters.
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5 Things We Watch: The return of the banking crisis, Japan, China, Liquidity and Euro Inflation
The banking crisis seems to be back, Asia is apparently the new black, and the hopes of an economic comeback in the West is vanishing. Things are certainly not as we thought a couple of months ago, but follow along as we look at the best hideouts in this week’s edition.
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Money Watch: Your favorite liquidity proxy is about to become drier than a Martini
The banking-storm has calmed down a bit and the small banks’ share of total deposits has regained some territory in recent weeks. However, if fixed income losses continue to weigh down on balance sheets, then we cannot rule out more stories of banks in trouble. For now though, it would seem the FED intervention has idled the turmoil.
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Money Watch: Is the BTFP just another form of QE?
A new abbreviation has made its way into the vocabulary of those with an interest in finance, markets, the state of the economy or all of the above. So, what is this ‘Bank Term Funding Program’, and does it really differ from QE in nature?
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5 things we watch: Deposit flights, lending standards, liquidity, peak rates and PMIs
It’s been another of those macro weeks that makes you 10 years older in a matter of days. We look at the timeliest indicators of the deposit flight crisis and assess how to deal with it.
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Steno Signals #37: Revisiting the macro regime indicators considering recent developments
February did not play out fully as expected by our Macro regime indicator. We will assess why in the weekly editorial and update projections for March.
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Something for your Espresso: On PBoC liquidity alert..
PBoC injected almost “war-like” liquidity on Friday. Is this another sign of Chinese authorities really trying to pump liquidity into the system? This week we watch RBNZ, PCE prices and Japanese inflation.
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Steno Signals #36 – Why 50% of the current rebound is manufactured in a spreadsheet
We experience seasonal adjustments to an extent NEVER seen in time series history for CPI, Retail Sales and ISM numbers in January. Are we amidst a spreadsheet rebound or an actual economic rebound? We lean towards the former. Here is why…
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Something for your Espresso: Inflation crossroads
We are standing at cross-roads. Will waning inflation allow the market to speculate in a soft landing after Tuesdays numbers again?
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Steno Signals #35 – Has global liquidity bottomed already?
We have been spending countless hours discussing the liquidity outlook in the US, but developments elsewhere are equally as interesting. JPY and CNY liquidity is on the RISE, which has turned the tide on “global liquidity”. Position accordingly?
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Asset Allocation Watch: Introducing our macro regime indicator methodology
Our macro regime indicator is based on liquidity, inflation and growth, which are the three most important tactical asset allocation variables. Here is how we have built the framework and what to expect from it in the coming months.
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Steno Signals #33: The USD liquidity cushion is alive and well
When the TGA is built up due to T-bills issuance, the ON RRP usage drops, which net/net means that USD liquidity keeps printing at more benign levels than anticipated by many. This will continue throughout February and March
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