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.
We added NOK shorts recently on the prospects of a continued tax bomb in reverse in Norway. We find the underlying fundamentals of the trade strong still despite being stopped out.
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!
China’s export/import activity is telling for the global economy and commodities remain a sell. Meanwhile, the TRY is getting annihilated despite Erdogan’s attempts to restore economic credibility.
The battle between MBS and Biden seems to be intensifying and so far Saudi Arabia is struggling to get the upper hand. Will the OPEC+ supply cut prove to be a game changer for markets?
A WSJ article suggested that US banks will be required to hold up to 20% more capital should the Basel rules be fully implemented by 2025. The Fed is likely to present a new direction for regulation by the end of this month according to sources. How severe is this? Here are the numbers..
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.
The ISM Services report had “pause” tattooed all over, while the RBA hiked this morning in a surprise move. Is the RBA a harbinger for the BoJ? We also took notice of the WSJ story in increasing capital requirements for banks.
While we have been vocal about an upcoming credit crunch, credit spreads are not moving whatsoever. Are the markets wrong, and what’s keeping credit spreads low?
Saudi Arabia once again attempts to gain the upper hand in the oil-market. There is no doubt that the frosty relationship between MBS and Biden plays a part in the ongoing oil-tango, but will Saudi Arabia succeed? We doubt it.
With the debt ceiling deal done and yesterday’s stunning NFP numbers, the soft landing narrative seems to be back, and optimism is gaining territory in the global macro scene. See what this means for positioning across asset classes, and whether you’ve placed your eggs in the right basket.
Our portfolio is green and we are content with the returns despite a few bad apples in the mix. The market environment is uncertain, and we anticipate increased selling pressure is imminent once the tightening gets going. Risk management and diversification are crucial in this setup. See our weekly performance evaluation for here details
The U.S. and Japanese equity markets present a contrast in earnings expectations, driven by differing economic conditions and monetary policies. Will the optimism for U.S. earnings growth last, and has the immense influx of capital to Japanese markets overbid fair value?
In short:
Watch out for the OPEC meeting this week as desperation can become the killer of solidarity, Easing energy pressures lending a helping hand to the EM space, Industrial metals screaming for more Chinese credit impulses
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.
Norges Bank is still asked to sell plenty of NOKs a month by the Treasury Department, while the scope for tax income is falling apart by the week. Position accordingly through June.
The hiring cycle has thrived due to a substantial depletion of the inflation-adjusted price of labour in 2021-2022, which may lead to a firing spree once inflation starts to come down and real wages start to go up. Will the labor market finally cave in due to falling inflation?
The purchase of TLT looks attractive from both a technical, tactical and fundamental perspective at this juncture. May inflation will look soft across the globe.
Will OPEC+ be able to rock the boat in energy markets again? Saudi Arabian budget break-evens are probably 5-7$ above current selling prices and MBS could be tempted to try and force the price higher again. The issue is that China is not playing ball and other OPEC+ members oppose further production cuts.
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.
While commodities traders have positioned themselves for the inevitable recession, some equities and FX are living their own lives, celebrating the recent debt ceiling optimism and better than expected GDP numbers. Find out if you have chosen the correct bets in this week’s edition.
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!
With weak economic data coming out of Germany expect internal pressures on the government to be hawkish on a European level to please its own disgruntled citizens and avoid losing voters.
Stop loss in 2yr UST trade taken
Several US regional banks fell victim to the waning confidence from depositors who ultimately pulled the plug. Are European banks really safeguarded by better legislation, or are we taking comfort in a false sense of security?
Is Brazil a hideout in the current environment? How will Italy refinance its debt? Is it time for CNY to head lower? Have we seen the top in DAX? And will the banking crisis move to Europe? Find the answers here.
With Lagarde and her companions taking a semi-hawkish stance recently, Italy is in a difficult position as funding possibilities are narrowing in front of their eyes. They need somebody to buy their govies, while the ECB wants to tighten policy further. Follow along in today’s piece, where we dive into the details of the Italian government and its debt problems.
While OPEC+ tries their best to prop up prices via cutbacks on supply, demand is evidently still not as strong as oil bulls would’ve liked. Will the Chinese momentum pick up and deplete reserves and will the turn of summer in the northern hemisphere counter such effects?
Our portfolio is live, and we have added USDCNH, long Japanese equities, long 2yr USTs, long EM Local Govies and the FOMO AI trade. Details are attached here.
Based on price action, equity optimism is back, but positioning data tells us another story. We unfold the mystery, as well as providing you with positioning data across asset classes. Find out if you share the view of traders in this week’s edition.