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.
2021 will be remembered as a great policy error year at the FED and the ECB. But other central banks saw the inflation coming. Will they be in front of the curve again in 2023?
As a new addition to our editorial, I will now provide a monthly overview of emerging markets, taking a step back from the intricacies and offering a broader perspective. The purpose of this feature is to outline our current positioning within the market cycle and highlight the key factors we are monitoring surrounding EM.
Welcome to the Central Bank Bonanza with meetings of both the Fed, the ECB and the Bank of Japan. We’re covering it all live here on stenoresearch.com. Ask your questions below!
The RBA and the BoC have given the global macro community a LOT to think about ahead of next week’s plethora of major central bank decisions. Is the Fed hike back on the table?
BoC and RBA have hawked up the sentiment again, while forward-looking indicators point in the other direction. Here are the FIVE things we watch right now in global macro!
Our monthly update on our asset allocation framework is out. We track down liquidity, inflation, and growth in all major economies. Inflation is currently stealing the show as liquidity remains wobbly. Remain long the disinflation theme.
When headline inflation wanes fast, real wages grow, while corporate profits shrink. This is now the base case for H2-2023 while Chinese and Turkish political developments MUST be watched from a macro perspective. Here is why!
Does Biden and McCarthy have the necessary votes to suspend the debt ceiling and save the U.S from default?
The USD is on the move and as per usual, repercussions are felt across the financial markets. Disinflation seems to be pretty across most of the globe and China is now actively exporting lower prices again. Position accordingly.
The USD remains on the move with increasing US/Chinese tensions, while equities keep reaching for the stars in Japan. European inflation numbers start coming in today.
As we close out our first week with a live portfolio, we are excited to introduce our new weekly watch piece, providing a comprehensive summary of our trading week. Every Friday, we will release this publication, and we extend a warm welcome to you all in this premiere edition!
The FOMC hawks have been parading over the past 24 hours, but the base case remains solid for a pause in June. Don’t count on further hikes, but maybe on a “prolonged” pause. Receive July vs paying Dec in SOFRs?
Remember that government shutdowns can be sanctioned well ahead of the TGA running empty. McCarthy has continuously said that a deal was needed this week at the latest.
Given the lack of an imminent economic crash risk, bond bears have been back in the driver’s seat. No news is bond bearish news, which in turn is likely to exacerbate the already worsening root cause of the deposit crisis. We are on high alert for the ramifications of the price action in the USD.
As the markets evolve, we adapt accordingly. Although the reopening of China’s economy is still ongoing, the optimism surrounding it is gradually diminishing. Simultaneously, the worsening economic data from Western countries indicate a significant slowdown. With the once-promising light at the end of the tunnel slowly fading away so do the flows. In this short piece we reveal our new position
This week has marked a return of the higher inflation, higher bond yields and higher equities narrative. Is the disinflation trend broken? Have bank issues disappeared? Or why are we back fearing higher rates? We urge you to WATCH the USD and it ain’t necessarily good news.
US politicians are busy “negotiating” a new debt ceiling while Europe is celebrating the Ascension Day. Apparently, hopefulness of a debt ceiling deal could bring about optimism in markets, but we continue to warn against taking the plain vanilla approach to the situation. Here is why …
While everyone is looking at Europe for safety we are taking the other side of the trade. The unbalances of the Eurozone haven’t gone away and with inflation & dark clouds on the horizon, we question whether an indebted fragmented economy can hold fast as the economic winds turn unfavorable. Lagarde is running out of bullets and fiscal ammunition is in short supply
The G10 central banks coordinately called the peak in global inflation after the Davos gathering earlier this year and now BoJs Ueda has hinted that central banks agreed at the G7 meeting that they should patiently wait and see for the effects on already implemented. The doves are cooing!
The USD debt ceiling is a returning topic and it’s typically not overly important for markets, but this time is likely to be different. The repercussions for USD funding markets may be material and in sharp contrast to consensus expectations the USD may stage the biggest comeback since Lazarus.
Weeeeehoooooooooooo! Inflation is finally truly waning, but have we forgotten about the reason why inflation is declining? Disinflation is only mana from heaven for so long and the USD funding market stress looms!
Tik-tok (do we even dare writing that now-a-days). The x-over date is approaching and in a continued bank failure scenario, the x-over date may be reached already during May. The USD funding market is about to get interesting. Here is why!
In recent weeks, social media and leading financial media have been flooded with sensational articles about the dollar’s demise. In this piece, I will provide an analysis of the actual immediate obstacles facing the American dollar where USD hegemony is being undermined. Given the current US debt ceiling theater, one can scarcely think of a better point of reference than the debt default champion of the Western hemisphere: Argentina
It is inflation week after a strong labour market report that smelled of nothing but a continued hiking cycle. The inflation report is unlikely to look as soft as the Fed hopes for, and we find a long USD position warranted despite the debt ceiling looming
How do we approach the most anticipated recession in newer history when the labor market keeps holding up? And how severe is the banking crisis in a historical context? We aim at providing you with the answers here.
Midweek has arrived and that calls for a rundown of the five things we watch the closest. As is the custom every Wednesday, we will take you through these most important themes (and charts) in macro and summarize how we interpret them.
Regional Banks continue to suffer, and PacWest looks very vulnerable at this juncture. Will the Fed deliver a hawkish or a dovish pause (after the 25bp hike)? That’s the question now.
We expect the Fed to deliver the last hike in this cycle, while the ECB is likely to deliver a dovish hike on Thursday. A big week ahead for central banks!
We have been bullish on equities through the year but now see increasing signs warranting a defensive shift in positioning. Liquidity is drying up both in Europe and the US, and BoJ has effectively made further liquidity adding interventions unnecessary. China may be the only place on earth with positive liquidity trends.
