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.
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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.
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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?
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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?
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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
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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?
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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.
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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!
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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.
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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.
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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!
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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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5 (+1) Central Banks We Watch – Fed, ECB, BoE, Norge’s Bank, BoJ & BCB
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
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COP28 Nuclear Deal – Implications for the Global Clean Energy Race
The COP28 nuclear treaty is the latest chapter in the story about the U.S.-China weapons race in clean tech.
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USD CPI Review – A slightly hawkish surprise
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.
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Portfolio Watch: How we play the last FOMC meeting of 2023
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
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EM by EM #33: Early Hikers = Early Steepeners?
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.
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Something for your Espresso: Time for a cup of milk in Frankfurt?
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.
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EM by EM #32: Keep calm & Carry Lira?
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.
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5 Things We Watch: CBs, Eurflation, OPEC, Ifo, Dutch Politics
It’s Wednesday and that means time for another 5 things we watch where we hone in on the things that we have been most interested in over the last week.
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Portfolio Watch: The last dance?
We have taken the unpopular decision of being net long USD and Oil after a massive sell-off. Read our reasoning below
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Out of the Box #24 : Too little too late Powell?
A “hump” may be on the way in the US economy but can the Fed steer clear of the gathering storm, while Chairman Powell has left the market in front of the monetary policy wheel? We remain skeptical
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5 things we watch: IFO, US rates, Earnings revisions, USD & Gasoline
It’s Wednesday and that means time for another 5 things we watch where we hone in on the things that we have been most interested in over the last week.
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USD’o’meter: Is King USD about to reverse?
The soft inflation report from the US led to a substantial sell-off in the USD alongside weaker real rates, but is the tide turning for the USD? Our models are not convinced yet.
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