Good evening and Happy New Year!! Meet the new weekly post, same as the old weekly posts.
I firmly believe that some degree of ‘structure’ and certainty in this world of new norms and old norms, is a good thing and so I’d like to continue along with format of attempting to help connect some of the dots of what I’m seeing along with what Global Wall Street is seeing.
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I would appreciate any / all input, comments, feedback and general tips as I embark on year 2 of my Macro Tourist journey ‘round the globe (and without a Terminal as a guide!).’
I wish one and all continued success on into the new year and appreciate you slowing down to consume whatever it is brings you here and I hope you find whatever it may be you looking for … I’ll begin with a look at 20yy DAILY (over past 1yr) inspired by Citi’s Foxy Five (and specifically #4)
Momentum has turned and remains more bullish than not, the 50dMA (4.049%) has been a decent level of support the past couple weeks and we’re now sitting right at resistance (3.81%) …
AND with THAT in mind, HERE is an updated look at a few items of interest to ME from the Global Wall Street Inbox …
Yes there are plenty of NFP recaps and victory laps included. Sorry. A few highlights of what you’ll find HERE
BAMLflow show, “Buy the World” — pic RoW > US (set to underperform) BMO weekly: “Fadable Offense?” » fade front end BID Citirates “Foxy Five” (top 5 trades, #4, 20y RICHENING MY fav HSBCs latest Major Bond Letter: #28 “Japan’s curveball” MS: get LONG 5s and 7s30s steepeners
And plenty more … AND if these are not enough (or you desire keeping ‘score’ of what they said, HERE is link back to some of the year ahead (2023) outlooks — I included this before XMAS HERE).
For some other topical ZH links including some BBG inspired data visualizations,
ZH: December Payrolls Beat Expectations But Wage Growth Disappoints, Lowest Since August 2021
AND then, as it turned out ISM was apparently worth MORE in terms of igniting (BOND and stock) market BIDS than NFP,
ZH: ISM Services Slumps Into Contraction, Factory Orders Plunge Most Since COVID
In as far as a couple, few OTHER items which are catching MY attention — from the week just past and which may be of some importance and interest in the week(s) ahead,
… average weekly hours worked fell sharply during December (chart).
Another big surprise this morning was December's NM-PMI. It fell below 50.0 for the first time since the first half of 2020 to 49.6 (chart). The production component was strong at 54.7, but new orders fell to 45.2. Notwithstanding December's solid gains in services-producing payrolls, the NM-PMI employment index edged down to 49.8.
It all adds up to a soft landing of the economy, in our opinion. Now let's see if we can get a lower-than-expected December CPI reading on Thursday, January 12 to keep the party going. The consensus seems to be that the first half of this year will be bad for stocks and bonds. It ain't necessarily so.
With these large and growing short positions in the long bond, something I came across on the intertubes — FINTWIT to be specific — and I believe everything I read on the WWW,
… Fresh from the worst year on record for bonds, investors turned optimistic as 2023 began. Undeterred by the memory that a year ago many took reassurance from the idea that bonds don’t do back-to-back annual declines, fresh positivity erupted thanks to a growing consensus recessions are coming and central banks will have to start cutting rates.
Treasuries chalked up their strongest start to a year since the Alan Greenspan era, underscoring how strong expectations are that a bit of economic pain will turn Federal Reserve hawks back into doves in a flash.
That aligns with strategists’ forecasts 2023 will be a year when yields fall and curves steepen, while traders are becoming more and more certain inflation will cool rapidly.
Policymakers though are pushing back. European Central Bank President Christine Lagarde ended 2022 saying rates have to go higher to tame inflation. There were plenty of indications in the first week of the year that even if some softer-than-expected CPI readings really do mean inflation has peaked, the ECB will stick to its tightening path.
Fed Minneapolis President Neel Kashkari led the hawkish rhetoric stateside, saying the US central bank has at least another percentage point of rate increases to deliver in 2023. In a sign of the stakes at play, Treasuries took a tumble after a private jobs gauge and the weekly jobless claims data underscored the potential for a strong US payrolls print that would spur the Fed toward higher rates than investors are currently expecting.
The potential for rates to go high and stay higher for longer would hit bond markets hard, especially considering weaker economies would likely force governments to borrow more.
Moving on then TO the week ahead AND for any / all (still)interested in trying to plan your trades and trade your plans in / around FUNduhMENTALs, here are a couple economic calendars and LINKS I used when I was closer to and IN ‘the game’.
First, this from the best in the strategy biz is a LINKthru TO this calendar,
