Happy Wednesday, and welcome back to our weekly edition of 5 Things We Watch, where we take you through the 5 things we are currently keeping an eye on in the global macro landscape.
Manufacturing Nugget: The Inflation Refueling Act?
The Inflation Reduction Act (IRA) intended to deliver both an expedited ‘green’ transition as well as a +$300 bn deficit reduction. But, what are the measurable effects circa a year later?
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Macro Nugget: 3 Charts on US Labour market
The intricacies of the US labor market make it challenging to derive coherent insights. To shed some light on our perspective, here are three charts that aid in elucidating our view
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Something for your Espresso: Services week!
With more and more (admittedly early) signs of a restocking phase ahead in Manufacturing, we shift our focus to Services this week.
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Something for your Espresso: Everything you better watch while ISM Manufacturing rebounds
There are admittedly early signs that the Manufacturing sector rebounds in the US with the Dallas Fed PMI confirming the stabilization narrative. We tend to agree on the direction of travel in Manufacturing, but here is everything you need to watch outside of that sector.
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Something for your Espresso: The gas trade (and proxies) running out of gas?
The spike in Nat Gas prices looks like a dead-cat-bounce for now, but the recent retracement may hide the underlying improving price fundamentals for the energy space. Orders to inventories are improving, even in the most bombed out sectors in Germany.
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Something for your Espresso: Hot headline, mild core? Steepening?
All eyes on US CPI and commodity markets this week as the USD curve steepener is the main driver of cross asset trends. Will hot headline- and mild core inflation strengthen the case for curve steepeners?
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Out of the Box #13: Services matter for central banks and Manufacturing for markets
If the service industry starts to fade relative to the Manufacturing sector, it may be exactly what central banks use as the excuse to pause (and eventually pivot) but markets are much more sensitive to Manufacturing PMIs.
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Something for your Espresso: Supply is back in the driver’s seat
Commodities gain even on days where they face obstacles such as a stronger USD and luke-warm manufacturing data. This is a strong signal that supply is back in the driver’s seat of commodity markets after a few quarters of demand driven price action.
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Equities Watch: Today’s Philly Fed Figures Make For Bullish Reading
Earlier this week we identified possible curtain-raisers on near-term developments in US manufacturing, and with parts of the Philly Fed Survey backing our findings, what can be expected for equities?
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US Manufacturing Watch: Indicators point to a cyclical rebound
The economic activity in goods manufacturing has been contracting since October 2022 according to the ISM reports, but contrary to the latest figure (46) select indicators hint of a possible cyclical rebound.
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Steno Signals #57 – What on earth is going on with the USD?
The USD has weakened materially over the past weeks, which could be an early harbinger of an improving growth cycle. If cyclical growth is indeed rebounding, right about everyone will be wrongfooted. Here is how we position for it..
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Asset Allocation Watch: Macro Regime Indicator – Introducing our brand new asset allocation model
Each month we assess the macro environment based on liquidity, inflation and growth models. Our models were right that inflation, growth and liquidity would all drop in June, but for July we see a possible slight uptick in growth, while inflation and liquidity will continue down.
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Something for your Espresso: Nothing happening is bond bearish
As long as “nothing happens” it is bond bearish as it alleviates fears of an immediate recession. Recent data is not bad enough to prompt further bond buying as of now.
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Stenos Signals #9: Demand is rolling over and markets are noticing
We have talked over and over about supply during the past 12 months, but it is now time to talk about demand. Go short the business cycle and buy USD.
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Steno Signals #6 – Is growth no longer relevant?
Inflation runs markets currently as it seems as if growth has become irrelevant for policy makers, but will such a narrative pass a reality test? I doubt it. Growth will re-enter the limelight soon!
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