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.
![Liquidity Watch: The $ liquidity outlook remains solid for Q3](https://stenoresearch.com/wp-content/uploads/2023/06/US-Debt-Watch-1080x675.png)
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.
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?
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?
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.
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?
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.
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?
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.
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.
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?
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
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?
Manic price action across the board this week and everything looks up in the air. We are still alive and kicking despite the volatility
Buy the fear and sell the hype is our overarching mantra in EM these days. Read how below!
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.
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?
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.
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!
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
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.
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.
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!
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
With central banks on duty again this week, we share our thoughts on rate decisions, updated projections and how to play it, before the meetings. Enjoy
The COP28 nuclear treaty is the latest chapter in the story about the U.S.-China weapons race in clean tech.
Read the main takeaways from today’s CPI report here, which came in slightly above expectations. The details of the report are hawkish, but as per usual inflation data is up for interpretation. We stick to long USD and paid front-end USD rates here.
We have made adjustments to our portfolio in preparation for the FOMC decision week,. Read our full take of the current macroeconomic landscape and see our new positions below
Forward curves continue to trend lower in the US and Eurozone. The early adopters are leading the way, but perhaps Yellen’s spending spree will pose another challenge for her EM colleagues. We have taken a look at potential receiver/steepener cases in EM space.
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.
Turkey is teetering on the edge of normalization, but the Lira’s stability remains in jeopardy as Erdogan manages a difficult situation, albeit from a reasonably advantageous position.