It is inflation week after a strong labour market report that smelled of nothing but a continued hiking cycle. The inflation report is unlikely to look as soft as the Fed hopes for, and we find a long USD position warranted despite the debt ceiling looming
How do we approach the most anticipated recession in newer history when the labor market keeps holding up? And how severe is the banking crisis in a historical context? We aim at providing you with the answers here.
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.
Regional Banks continue to suffer, and PacWest looks very vulnerable at this juncture. Will the Fed deliver a hawkish or a dovish pause (after the 25bp hike)? That’s the question now.
We expect the Fed to deliver the last hike in this cycle, while the ECB is likely to deliver a dovish hike on Thursday. A big week ahead for central banks!
We have been bullish on equities through the year but now see increasing signs warranting a defensive shift in positioning. Liquidity is drying up both in Europe and the US, and BoJ has effectively made further liquidity adding interventions unnecessary. China may be the only place on earth with positive liquidity trends.
McCarthy secured a symbolic win in the House, which arguably increases his bargaining power against the Democrats. The question is whether this increases or decreases the possibility of a debt ceiling deal short-term? Meanwhile, Deutsche Banks Q1 report poured oil on troubled waters.
We have updated our USD’o’meter amidst widespread doom and gloom around the USD outlook. But is the outlook really that bad? Our logistic regression is not convinced that the death of the USD is around the corner.
As long as “nothing happens” it is bond bearish as it alleviates fears of an immediate recession. Recent data is not bad enough to prompt further bond buying as of now.
The de-dollarization chatter is back after the IMF COFER data showed a new drop in the relative size of USD FX reserves in Q4-2022. Currently, everyone agrees that the USD will weaken from here, which is when you need to become worried.
The inflation report made for benign reading for monetary policy doves as a slightly more broad-based disinflation picture is starting to emerge. Will the Fed acknowledge the trend and pause in May? We think so.
When it comes to the debt ceiling, politicians are not the only ones asleep at the steering wheel. Political commentators, too, seem freakishly calm telling folks that Congress *eventually* has to reach a settlement on raising the debt ceiling. While I don’t disagree with the end-result, it is astounding how few are concerned with the likely government crisis that will unfold before a deal is struck. We are underestimating the power of the Freedom Caucus and overestimating Biden’s willingness to avoid a government shutdown. The cocktail is putting the U.S. on a path towards debt brinkmanship.
With the banking turmoil fading a bit, we thought we’d turn some of our attention elsewhere. It’s not like there is a lack of things to cover in global macro. Once again, we present our timeliest findings and assess how to interpret them.
A new abbreviation has made its way into the vocabulary of those with an interest in finance, markets, the state of the economy or all of the above. So, what is this ‘Bank Term Funding Program’, and does it really differ from QE in nature?
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…
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.
We experience seasonal adjustments to an extent NEVER seen in time series history for CPI, Retail Sales and ISM numbers in January. Are we amidst a spreadsheet rebound or an actual economic rebound? We lean towards the former. Here is why…
Mester and Bullard have brought back the 50bp chatter and the market is now slowly opening the door for more than 25bps in March. We continue to find the bar to be VERY high for a 50bp hike and no important members have so far mentioned such a hike.
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!
We have been spending countless hours discussing the liquidity outlook in the US, but developments elsewhere are equally as interesting. JPY and CNY liquidity is on the RISE, which has turned the tide on “global liquidity”. Position accordingly?
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.
Is Kazuo Ueda another trial balloon from the Japanese government or is this a confirmation that politicians seek a break-up with the ultra-loose policy of Kuroda?
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.
Chinese inflation is re-increasing, which rhymes with our APAC inflation story for H1-2023. The question is just how strong the Chinese momentum really is.
Our macro regime indicator is based on liquidity, inflation and growth, which are the three most important tactical asset allocation variables. Here is how we have built the framework and what to expect from it in the coming months.
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?
When the TGA is built up due to T-bills issuance, the ON RRP usage drops, which net/net means that USD liquidity keeps printing at more benign levels than anticipated by many. This will continue throughout February and March
We look into how traders are positioned every Saturday to assess whether we are leaning with or against the wind. Is this a new bull run or just another bear market rally? Let’s have a look at the numbers
How closely tied is the USD outlook to the liquidity outlook and what does it mean for the USD barometer going forward?