Daily Post

Liquidity is flowing beyond central banks, creating a clear reflationary signal and fueling risk appetite. Cutting through the noise, the simultaneous rise in inflation, growth, and liquidity points to a powerful macroeconomic shift, with the Fed potentially adding fuel to the fire.

Similarly to launching his meme coin, Trump’s focus remains fixated on short-term wins at the expense of long-term stability. Why should ballooning debt be any different when immediate gratification is the priority?

A look at MXN and CAD on the back of Trump tariffs announcement.

While a stronger economy and contained inflation data have let risk assets rally towards the latter part of last week, the current digital asset projects from Trump have delivered more fuel to the rally.

China is improving in GDP terms as we round the week, but what does that mean for risk assets and the macro picture?

Yesterday’s softer-than-expected core CPI print fueled a relief rally in risk assets, though mixed signals from CARTS and diffusion data suggest the inflation narrative remains uncertain. Today’s Retail Sales report will be crucial in determining market direction, with strong consumption trends pointing to upside risks, but conflicting indicators adding a layer of caution.

With inflation cooling and markets teetering, the BoE might just trade in its tea for maple syrup. Meanwhile, across the pond, the US CPI is brewing a hawkish storm, reminding everyone that taming inflation is no walk in the park.

BoJ will likely have to react to inflationary pressures due to Fed hawkishness and wage and price growth.

From whisper numbers and payroll predictions to revisions, wage growth, and unemployment trends—here’s why this could shape market sentiment amidst rising rates and a resilient labor market.

We are witnessing a severe repricing of global bond yields, and the rise in inflation expectations is now a global phenomenon more than a local one. Bond yields are looking nasty here.

The positive correlation between stocks and bonds is back, which means that bond yields are now all that matters. Will the ship turn?

We are back with dailys in the new year and start by looking at the crazy action yesterday afternoon after the tariffs news broke.

Plus thoughts on the Vix and the upcoming government shutdown drama in the US

While Powell spooked positioning with the biggest relative VAR shock since March 2020, an influx of liquidity is just around the corner. Perhaps Powell has actually lowered the bar for easing in 2025 by hawking up the projections—September in reverse?

Macro surprises are turning in the US, and markets will likely not get the reacceleration in growth that they are looking for. Will this melt-up in December lead to a melt-down in January?

While China is moving nowhere and Europe remains paralyzed by political troubles, the US market Santa Rallies, especially in everything high-beta with a sensitivity to liquidity and bond yields.

Markets have a hard time figuring out where the neutral rate is in the US and its peers, which leaves interesting opportunities in Fixed Income as we enter 2025. Are markets right that neutral rates can be widely different in a global economy?

As the Fed and ECB navigate different paths, markets wrestle with rate cuts, QT, and shifting inflation dynamics.

The U.S. inflation report provided a reassuring backdrop for risk assets. However, we anticipate the ECB to adopt a hawkish stance relative to market expectations today—a view that likely runs counter to public opinion. Here’s why.

For the first time since early 2023, markets are starting to price a marginal risk of re-accelerating inflation, marking a major shift. Everything hinges on inflation being resolved, and things could get ugly if it climbs back towards 4%.

China changes its stance on monetary policy for the first time in a decade, moving from “tight” to “moderately loose” – a label that was last used during the financial crisis. Are they moving the needle this time around, or is it another round of headline hockey?

While this week is relatively quiet from a release perspective, we are getting news from China that monetary policy should be “moderately loose”—the exact same wording used in 2008.

The NFP consensus has been rising consistently ahead of the release today as markets expect the last report to have been a fluke. Is this narrative justified? We present 3 arguments as to why it’s not.

We are starting to see European equities rally across the board—also relative to US indices. Is Europe poised for a broad-based comeback in risk assets?

We will get Services PMIs from nearly every major economy in the world today, and you can’t afford to miss out! This week could set the stage for the next geographical relative value trades in macro, as the manufacturing versus services divergence begins to materialize as expected in the US.

China’s Yuan slides as stimulus whispers grow louder, the Fed hints at a December rate cut despite its September reaction function misaligning with current data, and Germany struggles with rising wages amid industrial decline

China’s growth engine is sputtering, Japan’s finally waking up with inflation, and the USD is wobbling under bond seasonality and Fed liquidity magic. Throw in an oil-yield breakup and slowing U.S. services, and you’ve got a market cocktail worth watching!

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.

The meeting minutes from the Fed supported the US Treasury investment case, and we continue to see signs of lower bond yields in the US, which also spills-over to the USD despite tariffs threats. 

IfTrump genuinely wanted to implement tariffs, why would he offer Mexico, Canada, and China a way out?