The tide may be about to turn on several recent trends as we head into Liberation Day. Here are the four major developments we’re watching closely over the next 24 hours:
Steno Signals #191: Meowing at Robots Ahead of Liberation Day!
While Trump is barking, Vitalik is meowing, and markets remain skeptical of US assets versus the rest of the world. But Liberation Day may turn the tide on many of Q1’s dominant trends. Here’s why!
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Steno Signals #123 – The market is sniffing out a big liquidity increase
Several markets are already trading as if liquidity has arrived in size, but we have yet to truly see it. The good news is that the ON RRP is close to depletion, which may lead to an early end to QT.
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Steno Signals #122 – Markets have abandoned the cutting narrative (outside of EZ)
We are left with a market pricing that mostly considers 50bp cuts a feasible scenario in the Eurozone, but the ECB is not a 50bp central bank, especially not if its peers aren’t moving that fast.
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Steno Signals #117 – 25bp equals mayhem, while 50bp equals panic?
The decision between a 25bp or 50bp rate hike is of utmost importance this week. In either case, it likely makes sense to continue leaning into Fixed Income, as markets are neglecting inflation and focusing solely on growth.
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Steno Signals #116 – Here comes the dash for USD cash!
There is more fundamental merit to the sell-off we are currently experiencing than the one we faced in July. China has come to a sudden halt, and we are facing a USD liquidity withdrawal. Dash for USD cash!
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Great Game – What we know about Harris’ economic plan after DNC
What the U.S lacks in Eurovision, they make up for during the Democratic National Convention. But in the midst of the media-mayhem, were we robbed of economic policy?
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Liquidity Watch: The $ liquidity outlook remains solid for Q3
We are not miles from the needed threshold level of USD reserves in the system and the Fed is aware of that. This is a strong reason to believe that liquidity conditions will remain benign from here on a trend basis.
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: 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?
The Week At A Glance: ISMs, NFP, FOMC & QRA to put even more pressure on USD rates?
Loads of USD key figures and we mostly lean in a hawkish direction. This could re-fuel strong flows into the USD and paid USD rates positions. Here is why in our “the week at a glance” publication.
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?
Something for your Espresso: USD liquidity back in the driver’s seat
Our quant PCA tool flags USD liquidity as the most important macro driver so far in April, which is interesting given the ongoing tax season. The worst is probably already behind us even if the tax season runs for another 10-12 days.
EM Gold Rush: The pressure valve amid Asian FX debasement risks?
Asian FX weakness is back, and the USD/Gold correlation has turned positive. This begs the question: How does it rhyme with the continued surge higher in gold, and has something fundamentally changed?
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Energy Cable: Good luck reaching your 2% target, Powell
The reflation will likely continue as long as Powell and his ilk keeps an implicit dovish bias intact. Energy markets will likely remain bid, but the broader commodity story seems more interesting to play than oil at these levels.
Something for your Espresso: Another input cost SHOCKER upcoming?
On the back of the hawkish surprise in the CPI, we find PPI consensus amazingly low ahead of the release later. The resurgence of USD inflation is likely going to impact the reaction function of the ECB even if the outlook is diverging fast.
FX Watch: Tough times ahead for king USD?
2024 has been better than feared for the USD, with hotter inflation data and better economic conditions paving the way for a stronger dollar, but what happens if the Fed cuts into sticky (or even rising) inflation?
EM by EM #43: Rand’s Reckoning?
The latest US CPI data clearly indicates that inflation in the US is not yet defeated. With interest rate cuts anticipated further down the line here is our perspective on EM’s
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Something for your Espresso: Food for hawks or doves?
The NFP spooked rates markets, but there are reasons to believe that technicalities were behind the spike in job creation and wage growth. Time to receive again?
Portfolio Watch: Riding a Rollercoaster
Manic price action across the board this week and everything looks up in the air. We are still alive and kicking despite the volatility
EM by EM #41: Fearing the Fury but Fading the Fear
Buy the fear and sell the hype is our overarching mantra in EM these days. Read how below!
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5 Things We Watch: Iran, China, Crypto, Inflation and the Fed
Macro is on the move and we have diverging trends in inflation. Find our brief overview of the five themes that move markets the most this week in global macro.
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Demographics Watch: Biden’s voter base grows ahead of 2024 election
With Trump looking as a sure-fire bet to take the Republican nomination, how is the voter demographics poised for the eventual Biden-Trump rematch?
Something for your Espresso: Peak dovishness (in the USD)?
The USD strikes back again in a sharp move against the 2024 consensus expectations. We still struggle with the relative Fed versus ECB/BOE pricing after another stinker from the UK this morning.
Portfolio Watch: Peak Dovishness & more liquidity?
While we’ve persistently underscored the risks of intensifying conflicts in the Middle East and enduring inflation in the US, it’s evident that politics serves as the unifying factor behind both. Read how we are playing this environment below!
EM by EM #38: Inflation returning with a vengeance?
As the US CPI is set to maintain its resilience, several sectors are contending with margin pressure due to the slower decline in costs. In the world of emerging markets, the soft landing appears to be losing steam, running on fumes. Meanwhile, finance ministers are once again in the limelight as 2024 unfolds as a pivotal election year globally
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U.S. Debt Watch: Biden Lost $17B the First Day of 2024
The U.S federal government is ringing in the new year with a 1% cut to all non-discretionary spending – a consequence of a little-known provision in the June debt ceiling agreement.
Something for your Espresso: Bye bye USD?
The USD is trading weak versus especially low-yielding peers, which is consistent with a bull-steepening of the yield curve. The question is if the SNB and the BoJ will have to change plans due to stronger FX developments.
Portfolio Watch: Liquidity the name of the Game
With Central bank bonanza week in the rearview mirror, we reflect on the state of current pricing and reveal how we like to be positioned. Read our full Portfolio Watch below!
EM by EM #34: Xi’s whip and Powell’s kneeling
After tonight’s press conference, any doubt about who is driving monetary policy should be dispelled. Powell appears to be allowing the market to dictate and is hesitant to provide significant guidance, in stark contrast to Xi and China, which seem somewhat immobilized yet hesitant to acknowledge reality
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