The FOMC will likely decide to raise the Fed Funds target range by 25bps and regret it soon thereafter on Wednesday. Everything but the banking sector stress screams higher interest rates, why the Fed will attempt to regain control of the narrative.
The US inflation print yesterday would have been a CLEAR 50bp data print, but markets and we remain convinced that the credit event will force the Fed to rethink. The ECB is, on ther other hand, not awake yet.
Midweek has arrived and that calls for a rundown of the five things we watch the closest. As is the custom every Wednesday, we will take you through these most important themes (and charts) in macro and summarize how we interpret them.
Powell is back as the hawk we knew from 2022, but the extreme data-dependency is volatility creating by design. One soft inflation and/or job report and we will back at where we were just a few weeks ago. Buckle up.
Bostic from the FOMC surprisingly hinted of only 25bp steps and a pause this summer. This is a surprise and something that will be tested unless price pressures fade fast this spring.
Our working hypothesis continues to center around the current inflation pick-up resembling the September report from 2022 (released in October). Here are four charts that will make you go hmm…
A few participants favoured a 50 bp hike at the last meeting, but the overwhelming majority backs a strategy where a slowing pace allows the Fed to gauge the extent of hikes needed. Forget about 50bps in March.
What is the USD outlook given current liquidity gauges and economic conditions around the globe, you ask? Well that is why we have the Dollar O’Meter where we’ll look at the USD through different lenses.
Midweek has arrived and that calls for a rundown of the five things we watch the closest. As is the custom every Wednesday, we will take you through these most important themes (and charts) in macro and summarize how we interpret them. Dig in!
The disinflationary vibes are not tattooed all over this inflation report despite a cooling yearly inflation pace for the seventh consecutive month. BUT.. do note that Powells target variable keeps cooling!
With the recent almost farcical economic data coming out of the US, we bet economists and traders are on the edge of their seats awaiting the coming CPI-print. In this ‘preview’ we’ll turn to our charts trying to align expectations to select indicators.
Tuesday’s State of the Union address gave little cause for optimism that a looming debt crisis in the U.S. can be avoided. Speaker Kevin McCarthy, seemed as powerless as the day he was elected and Biden certainly didn’t make his life any easier.
The RBA echoed rhetoric from other central banks and will frontload a few hikes while assessing the “extent” of damage done to the economy of former lags. The question is now if Powell rocks the boat on the coordinated central bank rhetoric today.
An eight-sigma beat on non-farm-payrolls for it to print at 517k versus expectations of 188k. What is going on?
The extent of hikes will now be 100% data-dependent and guided by how lags of former hikes will hit the economy in both the US, the UK and the Euro zone. This almost felt like a global coordinated “inflation has peaked” narrative from central banks. What are the ramifications?
Weaker USD, lower rates, performing equities and credits. Powell blew it if he truly wanted to push back on loosening financial conditions. The Fed is now talking about the extent of hikes instead of the pace of hikes, which is an open door to a pause already in March. Position accordingly, not least as the ECB has a rare opportunity to “hawk things up” further.
On Thursday, the U.S. hits its 31.4 trillion-dollar debt limit. If Congress fails to raise or suspend the limit, the U.S. risks defaulting on its foreign debt with global economic ramifications. So naturally, Steno Research is launching a new ‘U.S. Debt Countdown’ watch series to keep tabs on when the U.S reaches the magic ‘X Date’: the day when The Treasury runs out of ‘extraordinary measures’ to postpone the worst-case scenario, and must succumb to default.
Everyone agrees that a recession will hit this year, but will the Chinese reopening wreak havoc with the very uniform positioning across assets? Our flagship editorial Steno Signals is out every Sunday at 14 CET / 08 ET
Is it really a possible scenario that the Fed will do stealth-QE by summer 2023? And are equities still a sell based on USD liquidity plumbing? Get the answers here!
It is hard to find a single inflation indicator not rolling over, but there is ONE and that will be tricky to handle for the Fed. Meanwhile, European energy supplies are MUCH better than feared!
The current supply squeeze is one of the worst seen ever. The disconnect between demand fundamentals and food- and energy prices is simply eye-catching. Watch the downside, but not yet.
Duration has been “killed” by financial markets over the past year, which carries repercussions for all asset classes. How can you track duration across assets and is the duration sell-off over?