While we await the Chinese fiscal briefing, we are beginning to see some interesting tradable trends in USD and EUR assets. The gap is widening again, and EUR rates remain far from neutral.
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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Portfolio Watch: Don’t underestimate the US consumer
We are off to a flying start in our bets on the US consumer. We consider the “excess savings depletion” narrative vastly overcooked, and find the playing field to have changed leaving consumption solid in the month(s) ahead.
Something for your Espresso: Second-guessing the next (growth) narrative
It’s make or break time for the US economy as the “recessionistas” are back in the driver’s seat ahead of the ISM Services release. Rates markets will be monster sensitive to the release later today.
Something for your Espresso: What if the dual mandates move in opposite directions?
The NFIB survey made for worrying reading for the Fed as the dual mandates seem to move in opposite directions. How to balance weaker employment growth and higher prices in an election year?
US CPI Reaction: Headache for Powell not so much markets
Hot on the heels of today’s awaited US CPI report, we offer our rundown of the most noteworthy figures. Safe to say the Fed wasn’t helped along in achieving their target.
Something for your Espresso: The US is accelerating, what’s next?
The market consensus is turning more and more upbeat on 2024 forecasts for the US economy, but what about China and Germany?
Something for your Espresso: Is disinflation with us in the room right now?
Wage data is starting to question the disinflation momentum across G3 economies. Can wage data drive prices or is it a false flag?
Something for your Espresso: May back in Play?
Inflation from the US and UK take center stage. May back in play for both?
Labour Watch: Why you should pay attention to the Border
A lot has been said about the Non Farm Payroll report last week yet we believe certain aspects have still largely flown under the radar. Read which below
Steno Signals #83 – A striking divergence between EUR and USD money trends
It remains an overwhelming consensus that a strong cutting cycle is in the cards, but there is growing uncertainty around the inflation outlook that is yet to be reflected in market pricing. Money trends are not tight enough.
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Something for your Espresso: The slowdown in the US is “well-hiden”
US data surprises have started to soften, but given the oil demand, service sector price plans- and hiring intentions, it is safe to say that the slowdown is still well-hidden. European inflation is waning much faster than across the pond.
Something for your Espresso: Running on fumes?
The strong US data seasonality into year end could wreak havoc with the current early Santa Rally in cyclicals. We are on high alert for a hawkish reaction function in December.
Great Game – 3 Reasons Why Trump Will Win – And 1 Reason He Won’t
With Donald Trump performing relatively well in recent polls – is he actually the favorite going into 2024? We take a look at some key demographics.
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USD CPI Watch: The tricky path to 2% despite a soft report
The US CPI report will land in our inbox tomorrow, and while tomorrow’s print could look promising for the disinflation-crowd, the path toward 2% is more tricky than first anticipated.
Something for your Espresso: Fuel for disinflationistas?
Market consensus clearly hoping for soft inflation prints from both the UK and the US this week. Will they get more fuel for the disinflationary rally?
Out of the Box #23: Why the Treasury undershoots actual issuance needs
The US fiscal trajectory is unsustainable and will require resolution, but does it inevitably entail excessively high-interest rates for “longer”? We have our doubts.
US Debt Watch: Time for lengthy shutdown?
The U.S government will shut down on Sunday when FY23 funding elapses with no spending bill to replace it. This is how we assess the shutdown unfolding and how it will affect the outcome of the final 2024 budget.
Something for your Espresso: Waiting for a German restocking cycle amidst a shutdown
A crucial week is ahead of us in global macro as the only remaining bastion in the global economy may be heading into a shutdown. Meanwhile, we are watching for signs of an emerging restocking cycle in Germany.
US Economy Watch: The Recession That Never Came… Or?
Inflation in the word recession? Some have stubbornly called for a doomslike recession while others see the economy firing on all cylinders. Our data-based weigh in on the topic.
Out of the Box #17 How would US exceptionalism flip the table for the RoW?
Global trade is shifting and the US economy is still going strong but the dynamics are changing as are the times. How will global macro likely change as a result?
Great Game – Biden on charm offensive
President Biden flies to South Asia on a charm offensive. But what can he accomplish and what will the Chinese do?
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Investment Screening: Why Biden’s Order is Actually a Good Sign for US-China Relations
I think Biden’s executive order on investment screening is actually a good sign for US-China relations and a part of the ongoing “mini-detente”. Read why!
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EM by EM #12 – Is the surging Peso a prelude for a longer Mexico bull case?
Many have profited from MXN carry in the first half of 2023. But is there more left to squeeze out or is it running on fumes? We give our take here and assess the structural patterns at play in Mexico in relation to recent performance and the geopolitical climate.
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U.S Debt Watch: Do we need this conversation again?
Pheew… close call! The bipartisan debt ceiling bill saved the U.S from economic disarray. Now we can all take a well-deserved summer holiday and bask in the sunshine of the long-term financial stability ensured by responsible lawmakers who have no interest in short-term solutions nor gains. But no – not so fast! We still have a looming government shutdown to attend to.
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?
Earnings Watch: Which Equity markets offer the best opportunities across the Pacific?
The U.S. and Japanese equity markets present a contrast in earnings expectations, driven by differing economic conditions and monetary policies. Will the optimism for U.S. earnings growth last, and has the immense influx of capital to Japanese markets overbid fair value?
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.
US Equity Watch: A rotations game
Areas of the economy are showing increasingly worrying tendencies, and some are outright caving in. Ahead of today’s FOMC meeting, we decided to take a closer look at the state of US equities and whether the defensive rotation was due – or if one were better off leaving the table entirely…
Debt Ceiling Countdown #4: The Chicken Game Catastrophe
When it comes to the debt ceiling, politicians are not the only ones asleep at the steering wheel. Political commentators, too, seem freakishly calm telling folks that Congress *eventually* has to reach a settlement on raising the debt ceiling. While I don’t disagree with the end-result, it is astounding how few are concerned with the likely government crisis that will unfold before a deal is struck. We are underestimating the power of the Freedom Caucus and overestimating Biden’s willingness to avoid a government shutdown. The cocktail is putting the U.S. on a path towards debt brinkmanship.
