The “Watch Series” is a collection of individual series such as Europolitics Watch, Inflation Watch, Real Estate watch and much more. Stay tuned for in-depth coverage of your favourite subjects.
The economic activity in goods manufacturing has been contracting since October 2022 according to the ISM reports, but contrary to the latest figure (46) select indicators hint of a possible cyclical rebound.
With the recent move in swap rates and the JPY, we have once again looked into Japan to find out when BoJ will do something about their policy and if the Yen is a viable option for your portfolio. JPY looks more like a sell than like a buy here.
With a strong jobs report and a soft CPI print, the market is currently digesting divergent data. In the upcoming weeks, we will closely observe market positioning to interpret the implications for price action. If the inflation paradigm is shifting, how are markets prepared?
We are entering a new trade to benefit from an expected reversal/stabilization of Manufacturing in the US and increased anticipation of a Chinese Stimulus. We enter the BCD US Equity (Broad Commodity Long ETF) ticker: BCD at spot 33.025 with a target of 35.95 and a stop loss of 31.65 .. We hope to use a slight reversal of trends today to get some exposure to the commodity trade as a good counterweight to our portfolio allocations. The USD has been easing against peers over the past weeks and even though we wouldn’t be surprised if the Greenback wins back some ground we find it compelling that commodities still have some short-term relief to catch up: Chart 1: Commodities vs DXY Chinese Credit impulse may be a bit distorted at this point due to extensions of debt but given that the PBoC don’t have many tools left in their toolkit at this point. Intervening to keep up the Yuan up whilst pushing for more credit creation is a tough ask- especially with households balance sheets remaining contracted and businesses facing less foreign demand.- We wager that Beijing intervenes with fiscal spending to fight the deflationary trends in the Chinese Economy and the Global Manufacturing PMI cycle could see some tailwinds from Chinese credit trends. Chart 2: ISM vs China Credit Impulse We too think we may be nearing a local bottom in US manufacturing- at least when we look beyond cars and overly rate-sensitive expensive stuff; the latest ISM report […]
We are back up on the week having forecasted the CPI record better than the street but contrary to the prevailing sentiment we think this juncture may prove a little counterintuitive
Trade Alert: Closing USDCNY and adding 2y-10y Steepener
On the back of the first truly soft inflation report from the US, we take a look at the inflation regimes across all major countries and find Norway and the UK to be the odd ones out. Paying GBP and NOK rates may still make a lot of sense.
Trade Alert: Stopped out of UUP
Just in: A brief account of today’s US CPI report.
With the US inflation report coming in later today, we have a look at the 5 things that we are keeping an eye out for in markets.
A quick note on household savings in the 4 major EZ countries where we apply the excess savings method of the Fed using Eurostat data
Rates are moving on the back of strong numbers in the labor market, but energy is not finding a bid… yet? This week we wonder if there is life in energy after all.
The June CPI report (released on Wednesday) is the final easily disinflationary report before base-effects start working against the trend for almost a quarter. Here is our chart-package on how things are going to play out..
The summer lull is here, which normally calls for a quiet period in markets. But volatility might not be as low throughout July as a lot of people anticipated, which could force PMs back from the beaches. Follow along as we dissect how traders are positioned coming into the vacation season.
Volatility has been detrimental to many books this week which too is reflected in some of our positions and it appears that diversification is gaining increased significance given the resurgence of volatility. Traders who are not paying attention here will pay for it involuntarily
Will the NFP beat expectations as per usual? Looks like given the data we have seen this week. This leaves USD rates at a critical juncture even if price data from surveys continue to look benign.
Emergency lending facilities provided by the Federal Reserve, and the BTFP in particular, relieved banks in distress and helped them stay afloat, but are the same risks still lurking or has the need for funding eased?
With the recent drop in house lending in the Eurozone, we take a closer look at how exposed European consumers and corporations actually are to further interest rate hikes. A teaser: It doesn’t look particularly great.
Europe has seen some remarkable energy prices in recent days with record negative electricity prices in the North Western part of the continent, while Saudi Arabia strikes again and prolongs the supply cuts into August.
Each month we assess the macro environment based on liquidity, inflation and growth models. Our models were right that inflation, growth and liquidity would all drop in June, but for July we see a possible slight uptick in growth, while inflation and liquidity will continue down.
We observe an increasing amount of weird microcosm deflation studies in Europe. So far, negative prices in Energy have been shrugged off due to “extraordinary circumstances”. Is this the “transitory” discussion of 2021/2022 in reverse?
Economic data keeps surprising us positively, and markets are starting to believe that a soft landing is the base case. That’s at least what positioning data is telling us.
Follow along as we keep you updated on our live portfolio and how we view the world allocation-wise every week!
The West sent checks, while China focused on supply-side policies in response to Covid. But what will Beijing do now?
The deposit guarantee scheme requires all banks to pay a yearly fee to local DGS funds to reach a preset target. But what countries are missing their targets, and who will have the hardest time at year-end?
Stop loss reached in EURSEK
Base effects will be harder to beat in June than in May, but we see increasingly compelling signs of a sharp disinflation in Europe over the next 3-5 months. Here is a chart deck on the trends we find most interesting to watch in EUR-flation
It’s Wednesday, and that calls for us to dissect 5 topics that we follow in Global Macro currently. What to expect from today’s panel discussion between governors? How is it going with the ongoing fragmentation of Europe? And will Riksbank hike 50bps like Norge’s bank? Find out here.
We find risks of a hawkish address from the Riksbank underappreciated and see 50bps as our base-case. The Riksbank needs to stop the bleeding in the SEK or at least attempt to and even the doves such as Flodén know it.
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.