It’s time for another briefing from China, this time focused on the real estate market. We should get used to this flow of briefings, but is anything actually changing? Here’s an update on the status of real estate in China.
The ECB is likely to re-emerge as a dovish guiding star, and with the absence of any truly positive news from China, the opportunity to receive EUR interest rates is becoming solid again. Meanwhile, UK inflation is expected to soften.
While the Chinese fiscal briefing was a huge nothing burger, we are starting to see pockets of the USD-denominated asset space behaving as if a USD “whatever-it-takes” moment is just around the corner.
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.
A better-than-feared jobs report, although somewhat “clouded” by a large public sector contribution. Overall, it seems like we are getting stimulus for an already stable economy, which is hard to construe as bad news.
The USD market will be flooded with liquidity in Q4, accompanied by rate cuts, providing Chinese authorities with a window of opportunity to ease policy. However, there is one issue: CNY liquidity is tightening now.
China just pulled a market stunt right before a flood of liquidity hits, and the Fed is cooking up some magic liquidity tricks to keep things lively. Buckle up for Q4.
There is currently an almost goldilocksy vibe in the air, which could continue throughout October. The outlook is brightening short-term and we are loading up on risk.
This is yet another false flag from China, and we expect the stimulus to be insubstantial in size relative to the problem at hand. In this analysis, we will explain why China is allocating insufficient funds to address a major issue.
The Fed will get plenty of opportunities to frontload cuts further this year as the labor market remains weak. Is this all driven by the election season? And why is the labor market so out of sync with the markets?
Is the Fixed Income market repricing rates up on the back of a frontloaded cutting cycle? It’s an interesting dynamic, one that will be impacted by the election cycle and debt ceiling dynamics.
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.
Is it really feasible to expect the EM rates cycle to tighten while the DM cycle is clearly moving in the opposite direction? If history is any guide, such a scenario is highly unlikely, and any window for this would be short.
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!
With the lukewarm NFP report out, we share our portfolio watch, update you on last week’s allocations, and offer some thoughts on where assets may be heading next!
This week’s job report will likely decide whether 25 or 50 bp is most likely in September.. Is the crowd of wall street economists getting too worried or too upbeat? The entire crowd of economists agree that July was a fluke.
The manufacturing rebound in H1 2024 was another head-fake, and we were correct in predicting that everyone would call off the recession. Now, the market is likely going to “reprice” the recession risk again.
Why is the CNH gaining ground if Chinese momentum has come to a sudden halt? It seems like there is a materially growing “lame duck” liquidity addition in China, while USD liquidity is set to wane in September.
The early evidence from European inflation in August suggests that we should not be overly concerned about inflation for this month. Instead, growth and labor markets will take center stage, especially given that China is not performing well.
The Chinese momentum has come to a sudden halt, and we think it is related to the front-loading of imports due to tariff fears. Could China become the victim of a wait-and-see approach until after New Years?
In a relatively quiet data week, we are on revisions watch. The second release of the US GDP report from the second quarter is out, and with the cat out of the bag the revisions will be heavily scrutinized.
The very late-cyclical pattern of a hawkish BoJ paired with a dovish Fed is now visible to everyone. How far will it take USDJPY lower, and will it pull the rug from under cross-asset markets?
The cutting cycle is now a done deal, and Powell is urging you not to resist it. The question remains whether this is positive or negative for risk sentiment. A lot of negativity is building beneath the surface in our models as we approach September.
The outlook on interest rates is exceptionally tricky, yet increasingly predictable. Everyone seems eager to cut rates, and it’s generally unwise to go against a trend without a compelling reason. Enter the debt ceiling!
Will Powell use the labor market as an excuse to cut rates quickly, while Ueda discusses raising rates in Japan? The QCEW-based revisions could give the Fed enough justification if they decide to move swiftly, even though the quality of QCEW data has been mixed lately.
We track the probability of rising growth, inflation, and liquidity momentum in real-time on a daily basis, and the developments since the start of July have been notably weak. This is the kind of setup needed to prompt central banks to restart their actions.
The short metals trade seems exhausted..
Retail sales have once again alleviated immediate recession fears, but signs of cracks are appearing in sectors that typically lag the business cycle, including construction. Consumers remain concerned about the economic situation. Bonds are holding steady for now.
The US CPI report is sufficiently soft for the Fed to shift its focus even further towards labor markets and growth. A weak retail sales report today could impact markets more than the CPI did.
Chinese monetary authorities are fighting against gravitational forces when pushing for higher bond yields. Meanwhile, investors keep piling into bonds, while they are selling stocks. Credit growth is too weak to do otherwise!