We saw the volatility that the Chinese headline hockey created, with markets moving in all directions due to new headlines coming in. It seems like we will get the same from Trump with tweets, statement etc. moving markets like crazy – and he’s not even in office yet.
Markets are celebrating the appointment of Scott Bessent as the new Treasury Secretary. He is seen as much more growth-friendly than markets feared—and he’s a snack for doves! But how will his policy initiatives affect markets, and are markets overreacting to the news? We’ve got you covered for the coming macro week!
Each week, we summarize the key insights we’ve shared with hedge funds, highlight what to watch for, and explain how we’re navigating the macro landscape – all in a simple, concise format. If you want to thrive in markets, this is a must-read!
Everyone and their mothers are long equities, and we would need a substantial trigger to truly reverse momentum at these levels. Where are the cluster risks after the positioning normalization that followed the Trump victory, and what should you look out for as we approach year-end?
NVIDIA beat average sales expectations yesterday, but markets were likely hoping for another blow-out report. But is a blowout report possible without the IRA actively supporting AI? NVIDIA strength might be gone for now, but crypto and risk assets are still rallying.
Inflation has suddenly become a talking point again as we await Trump taking office, but can we just take for granted that a Trump administration will be inflationary? It’s at least a bit more complicated than people think, and yields are actually down since the victory was announced.
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We have seen the Trump trades roar in Fixed Income and FX, but have other markets started to shift toward a Trump victory as well? Let’s find out!
The US 10-year yield took a breather yesterday after a strong 7-year auction, but there are reasons to believe the recent rally isn’t solely election-based.
While markets are busy revising the growth outlook down in the US, there are still reasons to believe that the growth party seen throughout September and early innings of October will continue, which favors (still) higher yields short-term.
We have seen a major shift from USD exposure towards European and Asian exposure over the past month or two, but exposure is slowly but surely returning to the US as USD rates and US equities are on the move. Is there anything left to chase in USD assets now?
We are starting to see the final signs that the Chinese frenzy is over for now, as briefings have been nothing but disappointments after the first round of stimulus proposals. It’s time to load up on US risk again, as it’s one of the only places on earth where growth is currently rebounding.
The US is probably one of the only places where growth is looking solid, while Europe and Asia are lagging behind, but the Retail Sales number later today might lower the mood in risk assets. Today’s stimulus news from China was once again unsuccessful, as they seem to underestimate the demand issues they are dealing with.
While the dust has somewhat settled in Chinese assets, with modest movements in both the Hang Seng and copper, highly China-sensitive metals like iron ore and steel continue their downward trajectory.
The inflation print yesterday was decently hot across most metrics, but it was overshadowed by a weak initial claims report, as it seems like all markets care about is still the employment side of things. Bostic has however opened the door for a pause in November, so what should we expect from rates here?
China is preparing stimulus in SIZE, but with USD real rate trends stalling and U.S. CPI data looming, the focus shifts to whether authorities can exceed expectations to further drive asset prices.
After the turmoil in the Hang Seng/CSI this week, with the Hang Seng dropping roughly 10 percent, one would expect sentiment to decrease rather dramatically. However, that’s not the case among retail investors, who are still piling into the China trade, while hedge funds appear to have been caught off guard by the sudden increase in Chinese equities.
While Chinese equity sentiment is still roaring, it coincides with both 1) dwindling momentum in Chinese equities and 2) a net decrease in Chinese liquidity, which makes us wonder whether the China story is slowly but surely fading. USD liquidity is likely a more interesting macro point at current junctures, with SOFR continuing to spike above the Fed’s upper bound.
The outflow from US into EUR/GBP assets continues as everything seems to be more or less priced into USD assets, while China positioning continues to soar. How are markets positioned going into NFP?
Markets are all over both JPY and CNY markets this week and have more or less left US markets hanging amidst the ongoing Fed cutting cycle. Are we looking into a Q4 where Asia is the place to be?
With the cutting cycle more or less priced in in USD assets, there are signs that markets are now piling into EUR and GBP assets instead to play the cutting cycle of the BoE and ECB. Everything positioning here as usual.
Markets are back on labor watch as Powell has signaled that conditions are not slowing down quickly enough for the Fed to promise more 50s. Meanwhile, expectations for Eurozone inflation are starting to look very soft. Are 50s potentially in play for the ECB if things start to sour quickly?
Ahead of tonight’s FOMC meeting, we take a quick look at positioning across asset classes to summarize which ones are likely to move the most if there are any major surprises from Powell.
It’s FOMC day, and we are currently placed in an fascinating scenario where both a 25bps and a 50bps cut would come as a surprise to markets based on current futures pricing. Everything seems to speak in favor of a 50bps cut, but are there any arguments to do 25bps?
Just as we thought that a 50bps cut was a bit out of the ordinary, Warren, Whitehouse and Hickenlooper has left the door wide open for a 50bps cut by signing a letter to chair Powell urging the Fed to cut rates by 75bps in September which has made a 50bp cut even more likely. Wasn’t the Fed independent? Long bond yields reacted a lot.
Markets are cheering for a 50bps Fed cut this week, but is it truly something to celebrate if it coincides with economic weakness? Lower rates are not always a positive for risk assets.
A portfolio needs a “soft USD rates” lean to perform in the current environment, a dynamic often seen around the first Fed rate cut. Here’s how we plan to reshuffle the portfolio.
The USD and USD rates continue their trend lower, as it seems markets are using any argument to bet on lower rates following the small revision of the PPI and the slightly hawkish ECB meeting yesterday.
The Fed is not going to cut by 50bp given this report, which contrasts somewhat with market expectations. The initial response may not be risk-negative, but if we continue to see weak labor markets and growth paired with sticky inflation, it’s time to run for the hills!
With the CPI report just around the corner, we examine whether markets may have become too positioned for a complete meltdown in both growth and inflation.