Macro Hive

In his latest podcast, Bilal Hafeez talks to Thomas Drechsel about measuring political pressure on the Fed, predicting the Fed, and better nowcasts! Listen here: 🐝The Hive: https://lnkd.in/e-cpqWFU 🎧Apple: https://lnkd.in/eyH7DpaG 📽YouTube: https://lnkd.in/eGpK6423

The Week Ahead: MOAT Event Week Coming? Welcome to The Week Ahead! In this episode, Benjamin Ford and Dominique Dwor-Frecaut discuss US election polling, Trumponomics, two more 2024 Fed cuts, and more! Watch full episode here: https://lnkd.in/eHaYxkFd

Check out our latest Key Events:  Will Weather Events Cloud NFP? G10 In the US, the main data is: -NFP – Friday. I agree with the consensus though the number will be difficult to interpret because of the impact of hurricanes. -PCE, personal spending and income – Thursday. We expect core PCE MoM at 24bp. I will be focusing on the low savings rate as it has been a key driver of the current expansion. -GDP – Wednesday. Consensus expects 3% and I agree. This will confirm the US economy is running above trend of about 2%, i.e., the output gap is widening, which is consistent with core PCE bottoming out in Q3. -Manufacturing PMI – Friday. This is more a trading than economic event: PMIs have decoupled from GDP. Please see our event monitor for market impact. -JOLTS – Tuesday. I agree with the consensus and expect the hiring rate to remain well above the separation (quits and layoffs) rate. In the Eurozone and UK, the main events will be: -EZ GDP – Wednesday. Will show if the economy has been as bad as recent ECB tone suggests. We will remove the outsized effect of Irish GDP volatility before taking a strong view. Since COVID, surveys have consistently undershot hard data – this could happen again, so we are wary ECB pricing has gone too far. -UK Autumn Budget – Wednesday. Key to UK rates outlook. We expect fiscal caution, retaining decent headroom, and looking to make credible commitments to reducing debt ahead. The market is discounting gilts on the risk of more issuance. We still like long UK rates. -EZ unemployment – Thursday. Follows Wednesday’s German unemployment. Will reveal if labour market tightness is persisting despite worsening surveys. -EZ prelim. inflation and CPI – Thursday. The last miss was driven by larger-than-typical fuel and telephone services discounting. This may reverse. We expect headline YoY of +1.9%, core +2.6% and services +3.9%. Hawkish ECB risk exists if 2023 price patterns persist. Read full article here: https://lnkd.in/eDR9grQz

In his latest podcast, Bilal Hafeez talks to Thomas Drechsel about measuring political pressure on the Fed, predicting the Fed, and better nowcasts! Listen here: 🐝The Hive: https://lnkd.in/e-cpqWFU 🎧Apple: https://lnkd.in/eyH7DpaG 📽YouTube: https://lnkd.in/eGpK6423

Check out our latest Weekly Futures Momentum Model: Models Turn Very Bearish US Fixed Income, Very Bullish USD/JPY Summary -Momentum models were down -0.5% over the past week, with equity models down -1.5% WoW, FX models down -0.1% WoW and rates models down -0.3% WoW. -Momentum models are down in aggregate over a three-month time frame, with rates and FX models the best performing (both -1.2%). Market Implications -Momentum models remain modestly bullish both AUD/USD and NZD/USD. We are short AUD/NZD. Read full article here: https://lnkd.in/eRfTvNUs

Check out Richard Jones's latest G10 FX Weekly: USD/JPY Downside Favoured as Markets on Intervention Watch Summary -USD/JPY has traded above 150 all week, closing above 152 for the first time since 30 July. -Since troughing near 140 in mid-September, USD/JPY has rallied roughly 9%, with rising US yields as well as Japanese and US political the drivers. -This has caught the Japanese Ministry of Finance (MoF)’s attention, whose top currency official verbally pushed back on JPY weakness last week. Market Implications -This verbal intervention puts the market on alert for MoF buying JPY. -This plus a key technical indicator showing USD/JPY is overbought, means we prefer positioning for a downside reversal. -However, we suggest patience and prefer scaling into a USD/JPY short slowly given political uncertainty. Read full article here: https://lnkd.in/eeQtrxgH

Check out Dominique Dwor-Frecaut's latest article - Trumponomics: Disruption With Macroeconomic Stability? Summary -We travel into the future and publish a policy letter from the Treasury Secretary nominee to President-elect Donald Trump arguing that: -Inflation should be kept below 3% through: -Keeping policy changes simple and predictable. -No increase in the budget deficit. -Strong competition policy. -Letting the Fed be the Fed. -Productivity should be raised through deregulation and industrial policy targeting services rather than manufacturing. -Workers’ income share should be raised through low skill immigration restrictions and stronger unions. Market Implications -The fixed income selloff accompanying rising odds of a Republican sweep could be overdone because Trumponomics is likely to be more rational than media conveys. -I still expect the Fed to cut twice in 2024, roughly in line with market pricing 1.7 cuts. -Long term, the Fed may have to revise its easing plans, though this revision would be unlikely before the 5 November US election. Read full article here: https://lnkd.in/eD_Csu5h

In his latest podcast, Bilal Hafeez talks to Rory Johnston about oil to $65, Middle East risks and Trump's agenda! Listen here: 🐝The Hive: https://lnkd.in/eJupV9Cv 🎧Apple: https://lnkd.in/e9kYxbz2 📽YouTube: https://lnkd.in/ewReXBuU

Check out our latest Key Events: ECB to Cut 25bp, But Market Still Too Dovish? G10 In the US, the main data is: -Retail sales – Thursday. Consensus for the control group (used to build GDP estimates) is 0.3% MoM or 0.1% real (based on CPI). The consensus forecast seems both attainable and in line with recent data suggesting a resilient consumer. In the Eurozone and UK, the main events will be: -UK labour market – Tuesday. Markets expect slowing wage growth to continue. Unemployment has dropped but shown volatility. Consensus expects it to remain steady at 4.1%, but we see rises ahead given accelerating unemployment claims. -UK CPI September – Wednesday. Consensus expects +1.9% in headline, +3.4% in core and +5.3% in services. We see downside risk: +1.8% in headline, +3.3% in core and +5.1% in services. Surveys suggest weaker furniture prices. The BoE expects headline of +2.0% and services at +5.5%, so risk exists of a dovish result for them. -EZ Final CPI September – Thursday. We expect the print to confirm prelims, with wage-intensive inflation momentum continuing to fade. We think it could reaccelerate in 2025. -UK September retail sales – Friday. Poor weather may have weighed on the September reading. More broadly, it is hard to see reasons to be bullish the UK consumer until households begin to run down savings rates. Read full article here: https://lnkd.in/eB9BHaD8

The Week Ahead: The Data Does Not Cooperate With the Fed Welcome to The Week Ahead! In this episode, Andrew Simon and Dominique Dwor-Frecaut discuss CPI, two more Fed cuts in 2024, next week's Fed speakers, and more! Watch full episode here: https://lnkd.in/e8tYYGZs