With revisions out of the way, we can look forward to the US CPI report on Tuesday. Everything points towards a softening and a May cut should be back in focus!
Central bankers accept that the next move is a cut, but they are continuously talking about “walking the last mile” on inflation. How long does it take to walk a mile?
The US economy is accelerating, and various indicators have clearly bottomed out already. The question is if prices will accelerate alongside the rebound in activity and whether the rates market is still wrong.
Morning from Europe ahead of a big inflation day. Disinflation has reached Australia, which is good news for our AUD duration bet. The January FOMC meeting will be all about QT.
Option premiums allow one to derive risk-neutral probabilities for the underlying security at expiry. How are these probabilities looking for USD, EUR- and GBP inflation?
The issues in the Red Sea are spreading from containers to dry bulk and energy. The impact from the Red Sea will not be seen short-term, but it may prove to be a sneaky and relatively lasting positive impact on inflation.
The Japanese Nikkei 225 has, apart from yesterday’s move lower, been on a streak of strength since the turn of the calendar. So, with its Asian peer on the ropes and the toned down remarks from members of the BoJ regarding inflation, is the index a buy from here?
The lack of a strong consumer rebound in Europe will make the rising freight rates less prone to impact CPI indices, while it looks much more likely in the US.
The ECB is unlikely to rock the boat on Thursday but we still find strong risk/reward in betting on substantial forecast errors by the staff in Frankfurt in the coming months. Here is why!
The Bank of Japan is unlikely to move the needle, if the Fed cuts rates. It is now a relative game between Ueda and Powell. Meanwhile markets are pricing a growing inflation divergence in G10 space.
The path to 2% has proven to be more difficult than anticipated, and the disinflation-trend is now potentially starting to turn in the US. Are markets positioned accordingly?
Inflation evidence based on price trends in January remains soft in Europe, but the danger from freight rates looms large. Will the ECB choose the half glass full or empty approach on Thursday?
CPI, PPI, HICP, or PCE? The inflation measures are plenty and each best serves different purposes. However, the varying methodologies and emphases on components prompt clearly deviating prints – AND allow for logical predictions.
Inflation math is important in times of price pressures and the embedded math works to underpin the economy via deficit spending.
Central bankers across the G10 space currently push back against market pricing. The market will likely eventually force their hands but chubby markets will be seen until.
This week’s 5 things we watch with hot topics. This week we’ll cover US recession talks and financial conditions. We’ll also hone in on both US and European inflation and finally talk rates expectations.
We have updated our HICP models for all of the four major Eurozone economies and find both the ECB and the HICP inflation fixing to be too hawkish. January looks particularly soft.
The USD strikes back again in a sharp move against the 2024 consensus expectations. We still struggle with the relative Fed versus ECB/BOE pricing after another stinker from the UK this morning.
The USD opened firmer against Asian FX after the Taiwanese elections, while China refrained from cutting the MLF rate. This week, the UK CPI report will be important.
The CPI is accelerating slightly in the US, but the gap between CPI and PCE seems to be growing. With the two directionally always aligned, a re-acceleration will also feed into PCE eventually.
UK core inflation is typically hot in December due to a spike in services costs ahead of Christmas, but there are signs of a weaker-than-usual season in our numbers. Read more here.
The US strikes back, both in growth- and war terms. The attacks on the Houthis overnight risk accelerating the energy prices again, while inflation already prints above expectations in the US.
Is US inflation going to surprise on the upside in the US? Relative liquidity developments continue to support the idea of higher USD-flation compared to EUR-flation.
Things are starting to look a little troublesome for the US economy in the mid-term as re-accelerating inflation and a weakening labor market is no easy cocktail for the Fed. Read more here together with some notes on freight rates, Japan and the new BTC ETF.
This week’s inflation numbers are unlikely to fuel receiver bets in USD fixed income, while freight rates remain the center of attention. Meanwhile, liquidity is improving fast.
The Fed has abandoned the strategy of bringing bank reserves (substantially) down, which effectively means that QT is over. This happens amidst rising freight rates. Rising liquidity and inflation?
Scandi-flation numbers are out next week from Norway and Sweden. Will we see CPIF inflation in Sweden printing below 2%? (Yes, we said that) and Norwegian inflation printing below 0% MoM again? Here are the details
The market seems to be chasing the narrative of higher rates for now and the whisper clearly leans in the direction of a stronger job report. Meanwhile, freight rates continue up.
Inflation evidence keeps coming in soft in Europe and early evidence from Germany and France support another dovish surprise. Meanwhile, rates are coming down again.
Limited upside in the ISM Manufacturing index as we await a dovish EUR-flation number coming in on Friday. There are plenty of things to look at in the global macro landscape this week.