Macro

In today’s briefing:

Monthly Monitor: China Activity Data (May 2024)
Revisiting the Japanese Market – Time to Increase Allocations?
CHINA: Do You Like AI? BUY Utilities!
CX Daily: Maternity Wards Are Latest Victim of China’s Falling Birthrate
BoE Rolls Hints to August
Indonesia Policy Rate 6.25% (consensus 6.2) in Jun-24
Norway Policy Rate 4.5% (consensus 4.5%) in Jun-24

Monthly Monitor: China Activity Data (May 2024)

Weak industrial output and urban fixed asset investment pose concerns to the health of the economy
The beat in retail sales is likely due to holiday season in May and thus its significance should be discounted
Going forward, we expect these three activity data to be weak unless the authorities launch more fiscal and monetary stimuli.

Revisiting the Japanese Market – Time to Increase Allocations?

By Rikki Malik

The main Japanese indices have been moving sideways this year
Continued weakness in the JPY has diminished returns in USD terms
Technically the market has similar weak underlying breadth as the US market

CHINA: Do You Like AI? BUY Utilities!

By David Mudd

AI is poised to drive a large increase in power consumption on the mainland. Data demand from generative AI necessitates more data centers and consequently more power.
China energy consumption is at the beginning of a super cycle as AI becomes integral to everyday corporate and eventually personal lives.
China’s clean energy names will benefit from the China’s energy strategy as its power needs from data centers surge.

CX Daily: Maternity Wards Are Latest Victim of China’s Falling Birthrate

Maternity / In Depth: Maternity wards are latest victim of China’s falling birthrate
Flood / Fatal flooding leaves 13 dead in South China
Monetary policy / China’s monetary policy will stay ‘accommodative’ despite deflated data, PBOC chief says

BoE Rolls Hints to August

The BoE unsurprisingly maintained the Bank rate at 5.25% with only two dovish dissents. However, the decision was “finely balanced” for probably at least four others.
August is explicitly identified as an occasion to review the Bank rate in light of the forecast round. High services inflation is being downplayed in at least the interim.
We see a lower hurdle to an August cut, reinforcing our call for that, although we still see it as a premature step that risks a reversal through rate hikes in 2025.

Indonesia Policy Rate 6.25% (consensus 6.2) in Jun-24

Bank Indonesia kept the BI-Rate unchanged at 6.25%, aligning with market expectations to manage inflation and stabilize the Rupiah amid global uncertainties.
Future interest rate decisions will be influenced by global financial market dynamics, particularly US monetary policy shifts, and the strong performance of the domestic economy driven by robust consumption and investment.
Ensuring Rupiah stability and maintaining inflation within the 2.5 ± 1% target range remain central to Bank Indonesia’s strategy, supported by monetary, macroprudential, and payment system policies to foster sustainable economic growth.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Norway Policy Rate 4.5% (consensus 4.5%) in Jun-24

The Norges Bank kept the policy rate at 4.5%, aligning with expectations, to maintain a tight monetary stance amid high but slowing inflation.
Despite low growth, economic activity exceeded projections in Q1, and employment remains high, supporting household consumption and overall economic stability.
While inflation has slowed, it remains above target, necessitating the continuation of a tight monetary policy; adjustments will depend on inflation trends, economic growth, and global factors.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

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Jun 20

Daily Brief Macro: China Economic Scenarios and more

In today’s briefing:

China Economic Scenarios
EM Watch: Is the Chinese copper demand down 40%?
Positioning Watch – Increasing the BETA risk?
Scandi Watch: Stay long NOK (and pay NOK rates) into Norges Bank
CX Daily: Alipay and WeChat Pay’s Smaller Peers Struggle Amid New Crackdown
UK Services Air-Lifts Dovish Pressure
US FOMC Projections Too Pessimistic; Two Rate Cuts Likely in 2024 as Inflation Abates

China Economic Scenarios

Uncertainty about China’s growth outlook over the next 1-2 years has increased with the government undertaking a tricky transition toward sustainable growth and a more active regulatory environment
Further fiscal policy stimulation will be required to keep growth on track to hit 5.0% in 2024
We do not feel that China’s equity market is cheap enough yet to reflect these risks, while domestic investors are not being supported by excess money supply growth.

EM Watch: Is the Chinese copper demand down 40%?

Welcome to our weekly EM and Metals editorial.
It’s hard not to talk about China again this week, given the importance of the metals trade for global inflation expectations.
Our live assessment of the Chinese recovery continues to paint a stalling picture in Real Estate, exemplified by the physical copper demand being on the edge of a precipice, while the pollution based metrics hint of a continued surge in industrial production into June.

Positioning Watch – Increasing the BETA risk?

Hello everyone, and welcome back to our weekly positioning watch.
Our newly invented high-frequency hedge fund positioning data was well received, and we’re working on expanding it to more assets on a running basis.
It’s worth revisiting the points we raised about concentration in broader equity indices.

Scandi Watch: Stay long NOK (and pay NOK rates) into Norges Bank

As Norges Bank gears up for its upcoming meeting on Thursday, all eyes are on the new rate path.
It’s widely expected that the central bank will maintain its current rates, putting the spotlight squarely on the future direction of rates.
Here’s what we can discern from the key components feeding into Norges Bank’s rate path model ahead of the decision.

CX Daily: Alipay and WeChat Pay’s Smaller Peers Struggle Amid New Crackdown

Payment / In Depth: Alipay and WeChat Pay’s smaller peers struggle amid new crackdown
China-Australia / Chinese Premier hails warming ties during Australia trip
Jobs / Higher wages, fewer jobs: The changing face of China’s manufacturing sector

UK Services Air-Lifts Dovish Pressure

UK services CPI inflation exceeded expectations again by only slowing to 5.68%, ruling out a June rate cut by being 0.4pp above the BoE’s forecast, but maybe not much more.
Headline CPI inflation is only tracking 5bps higher, and underlying measures are slowing, albeit not to target, while volatile airfares drive most of the latest upside.
The BoE will probably feel confident enough in its subdued forecast to keep an August cut alive. We still see that as premature but believe the BoE will do it regardless.

US FOMC Projections Too Pessimistic; Two Rate Cuts Likely in 2024 as Inflation Abates

By Prasenjit K. Basu

FOMC signalled in Mar’24 that 2.6%YoY core PCE inflation would allow three rate cuts in CY24. They now expect core PCE inflation of 2.8%YoY (above the Apr’24 reading of 2.75%YoY).
Core CPI inflation rose 0.2%MoM in May’24, suggesting a similarly benign outcome for core PCE. US M2 contracted for 16 months (Dec’22-Mar’24), an unprecedented tightening compensating for M2-excesses of Mar’20-Feb’22.
Aggressive QT in Mar-Apr’24 successfully squeezed out inflation, and core PCE inflation will likely stay below 2.6%YoY in H2CY24, allowing two 25bp cuts in the Fed Funds rate in CY24.

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Jun 19

Daily Brief Macro: CX Daily: China’s Sports Corruption Dragnet Casts Pall Ahead of Paris Olympics and more

In today’s briefing:

CX Daily: China’s Sports Corruption Dragnet Casts Pall Ahead of Paris Olympics
Momentum Trading Opportunities In Agricultural Commodities
Energy Cable: Short shipping companies?
Australia RBA Cash Rate Target 4.35% (consensus 4.35%) in Jun-24
EA Inflation Stays Soft Despite Rise
Great Game – Why Tesla is winning the EU-China trade war

CX Daily: China’s Sports Corruption Dragnet Casts Pall Ahead of Paris Olympics

Corruption / Cover Story: China’s sports corruption dragnet casts pall ahead of Paris Olympics
Euro Cup / Chinese brands intend to triumph at Euro Cup 2024
Cyberbully / China rolls out new rules for online sites to curb cyberbullying

Momentum Trading Opportunities In Agricultural Commodities

By Pranay Yadav

Corn futures show high potential for momentum trading, peaking in early-year gains and declining from June, matching seasonal harvest patterns in major producers like China and Brazil.
Over the past five years, momentum trading in soybean futures outperformed other crops with average annual returns of USD 13,600, though 2024 saw significant losses reflecting its counter cyclical performance.
Bearish outlook for corn in 2024 due to increased global production outlook from key regions, bearish shifts by asset managers, and USDA forecasts predicting lower season-average prices.

Energy Cable: Short shipping companies?

By Ulrik Simmelholt

Hello from a sunny Copenhagen where the Euro 24 fever is upon us all.
This week we’ll do a chart heavy analysis on shipping and nat gas.
We were stopped out of our long position in shipping in February due to false reports on a deal with the Houthis that sent the market tanking.

Australia RBA Cash Rate Target 4.35% (consensus 4.35%) in Jun-24

The RBA held the cash rate at 4.35%, reflecting a cautious approach in response to persistent inflation and excess demand pressures, aligning with the economic consensus.
Domestic consumption trends, labour market conditions, and global economic uncertainties will influence future policy decisions, focusing on achieving the 2-3% inflation target by the second half of 2025.
The RBA emphasizes data-driven decision-making and remains vigilant to upside inflation risks, maintaining flexibility in its policy stance to ensure inflation returns to target sustainably.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

EA Inflation Stays Soft Despite Rise

Final EA HICP inflation at 2.57% in May confirmed the surprisingly strong flash, with services inflation another 5bps above an already resurgent pace at 4.13%.
Underlying inflationary pressures converged across countries at a slightly below-target monthly impulse. Fundamental support from wages should prevent an undershoot.
The consensus increased over the past month, but the gap to our forecast typically remains 0.1pp or less. ECB cuts can continue if its peers follow its dovish path soon.

Great Game – Why Tesla is winning the EU-China trade war

By Mikkel Rosenvold

Welcome to this weeks Great Game, in which we will cover 3 major stories right now – European EV tariffs, the upcoming election in France and the turmoil in Brazil.
EU Tariffs on Chinese Electric Vehicles Situation: The European Commission is expected to disclose this week the tariffs it plans to impose on Chinese electric vehicles (EVs) due to what it says are excessive subsidies.
This move follows Washington’s recent decision to quadruple duties for Chinese EVs to 100%, although Brussels is expected to set significantly lower tariffs.

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Jun 18

Daily Brief Macro: Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail? and more

In today’s briefing:

Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?
EU: The Centre Holds… For Now
Persistent Weakness in Chinese Real Estate Will Drag Iron Ore Prices Down
The Week That Was in ASEAN@Smartkarma – Prodia Ready, AEM, and Vinfast
Steno Signals #104 – Get ready for a WAVE of liquidity in July!
Be Careful Precious Metals Bulls & Tailrisk Secular Inflation
China Debt Hangover and Policy Limits
The week at a glance: UK CPI report is taking the headlines together with Le Pen
Actinver – Macro Daily: Inflation 2h-May

Korean Government Is Pushing for a Comprehensive Inheritance Reforms – Will They Pass or Fail?

By Douglas Kim

In the past several days, the South Korean Presidential Office has announced that it is pushing for a comprehensive inheritance tax reforms.
Although the Presidential Office mentioned it is pushing to reduce highest inheritance tax rates from 60% to 30%, the more likely scenario is to reduce this rate to about 50%.
The lump sum personal deduction of 500 million won or inheritance tax which has been maintained for nearly 27 years could be doubled to about 1 billion won or more.

EU: The Centre Holds… For Now

By Alastair Newton

The centre’s position in the European Parliament is generally maintained, but the increased presence of right-wing/hard-right members threatens Ursula von der Leyen’s potential second term.
This political shift could further complicate the creation of policies related to green initiatives and migration.
The potential establishment of a nationalist government in France could exacerbate these complications.

Persistent Weakness in Chinese Real Estate Will Drag Iron Ore Prices Down

By Srinidhi Raghavendra

Chinese real estate investments fell 10.1% in the first five months of 2024 YoY. New home prices fell at the fastest pace in more than 9.5 years in May.
Fresh bank lending in China rebounded well expectations in May. Chinese banks issued 950B yuan (v/s 1.36T yuan issued last May) in new loans last month.
China’s consumer inflation held flat in May amid feeble domestic demand, uneven economic recovery, and consumer confidence weakness.

The Week That Was in ASEAN@Smartkarma – Prodia Ready, AEM, and Vinfast

By Angus Mackintosh

The past week saw insights on Prodia (PRDA IJ) after a management call and AEM (AEM SP) post-management changes, with some economic commentary on Thailand.
There was also an insight on Global Credit Growth from Daniel Tabbush and the CrossASEAN Ground Zero Insight looking at Vinfast (VFS US), digital payments, and social commerce player Evermos.
The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.

Steno Signals #104 – Get ready for a WAVE of liquidity in July!

Happy Sunday from Copenhagen! Risk asset investing is typically seen as a winter-sport for good reasons, but July is often up there among the best return months.
It’s as if July heard winter bragging about its stock market prowess and decided to show up in flip-flops, a Hawaiian shirt, and a cocktail in hand, just to prove that even in the heat, it can keep up with the icy competition.
This year is unlikely to be an exception as we will see improving liquidity trends into July, while the bond market seasonality is typically also a lot more favorable due to more benign issuance trends (especially in Europe).

Be Careful Precious Metals Bulls & Tailrisk Secular Inflation

By The Commodity Report

Be Careful Precious Metals Bulls Another friendly reminder that positioning in copper remains super speculative bullish – aka, there is much room for speculators to reduce their bullish bets again.
The same can be said for gold and copper, but not for crude oil.
Once again, there seems to be less demand than people realize – especially from China.

China Debt Hangover and Policy Limits

China has seen a very large increase in total public and private non-financial sector debt/GDP since 2008, which is unlikely to be repeated in the coming decade.
This is curtailing Chinese policymakers’ actions on monetary, credit and fiscal policy to support the economy, and actions risk being less than recent promises.
Thus we remain of the view that China will struggle to meet growth targets and we look for 4.5% growth in 2024.

The week at a glance: UK CPI report is taking the headlines together with Le Pen

Welcome to our weekly “The week at a glance” report released every Monday morning (and replacing our Something for your Espresso every Monday).
We look at the most important releases of the week ahead and address how we are positioned for them.
We have a relatively light week ahead of us in terms of key figure releases but both the RBA and the SNB will set policy rates, while the major key figure release is the UK inflation report ahead of the BoE meeting.

Actinver – Macro Daily: Inflation 2h-May

By Actinver

Big surprise in headline inflation with a -0.20% contraction during the second half of May.
As we expected, the drop was partly due to an atypical price decline in non-core inflation of -0.72% bw.
However, core inflation surprised with a -0.02% bw drop, possibly associated with the effect of the Hot Sale.

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Jun 17

Daily Brief Macro: Where Now for the Hong Kong Market? and more

In today’s briefing:

Where Now for the Hong Kong Market?
Hawkish Forward Guidance by Fed Fails to Dampen Bullish Sentiment
Tactically Cautious, But Not Bearish
Harvesting Seasonality in Iron Ore Prices Induced by Weather, Inventory Restocking, and Holidays
The Market Gods Present Patient Investors With Three Gifts

Where Now for the Hong Kong Market?

By Rikki Malik

Minimum correction targets have been hit for the Hang Seng Index
Some potential catalysts for the resumption of the bull market
We highlight some suggested sector allocations for the next phase

Hawkish Forward Guidance by Fed Fails to Dampen Bullish Sentiment

By Said Desaque

The Fed’s latest Summary of Economic Projections contained hawkish adjustments to long-term estimates of unemployment and the federal funds rate. Policy may not have been as tight as previously estimated.
The pressure to ease monetary policy in Canada and the Eurozone was more intense due to the prevalence of much higher levels of unemployment compared to the US.
Risky assets will increasingly discount the arrival of a lower FFR, thereby potentially making Chairman Powell reluctant to be more dovish due to fears about another US equity market bubble.

Tactically Cautious, But Not Bearish

By Cam Hui

A series of negative breadth divergences is signaling caution for the stock market advance.
However, breadth divergence can persist for a long time and these divergences should be regarded as cautionary conditions and not outright sell signals.
Investors should mitigate their long exposure using risk control techniques, such as using trailing stops, or take advantage of the low VIX to buy cheap downside put protection.

Harvesting Seasonality in Iron Ore Prices Induced by Weather, Inventory Restocking, and Holidays

By Srinidhi Raghavendra

SGX Iron Ore prices exhibit seasonality. For select six months being long Iron Ore combined with short positions during other months deliver positive P&L based on back tests.
In line with prices, realised volatility exhibits seasonality too. Options strategies can exploit this to deliver superior alpha & higher sharpe ratio.
Averages confound extreme variances. Monthly iron ore futures price returns are less volatile during the months of December, February, June, October, & March based on range.

The Market Gods Present Patient Investors With Three Gifts

By Cam Hui

Market conditions are setting up for buying opportunities in three markets. U.S. equities will probably weaken on disappointment over the timing of rate cuts.
European stocks corrected over political turmoil in France that’s likely to be temporary.
China’s announcement that its central bank had suspended gold buying looks like an entry point in the near future.

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Jun 15

Daily Brief Macro: Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 14 Jun 2024 and more

In today’s briefing:

Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 14 Jun 2024
CX Daily: How the EU’s New Tariff Hikes Will Affect China-Made EVs
Japan Policy Rate 0.1% in Jun-24
HEW: Backing-Out of Early Cuts
Sweden CPI Inflation 3.7% y-o-y (consensus 3.5%) in May-24

Walker’s Weekly: Dr. Jim’s Summary of Key Global Macro Developments – 14 Jun 2024

By Dr. Jim Walker

US CPI and Fed: US CPI at 0, potential Fed rate cuts speculated, cautious outlook from Fed.
China Optimism: “Age of Plenty” report shows optimism due to exports, tech, infrastructure.
Global Confidence: China improves, Thailand face declines and political challenges; Japan struggles despite stimulus.

CX Daily: How the EU’s New Tariff Hikes Will Affect China-Made EVs

How the EU’s new tariff hikes will affect China-made EVs
Hong Kong creates task force to investigate university management’s escalating spat
Bankrupt Sichuan Trust seeks investors to bring business back

Japan Policy Rate 0.1% in Jun-24

The BOJ maintained its policy rate at 0.0-0.1%, aligning with expectations and signalling a gradual approach to policy normalization. It plans to reduce JGB purchases over the next one to two years.
Global conditions, domestic economic indicators, inflation dynamics, financial market stability, and government measures will influence future interest rate decisions.
The BOJ’s strategy focuses on sustaining economic recovery and ensuring financial stability, with the flexibility to adjust policies based on evolving economic and financial conditions.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

HEW: Backing-Out of Early Cuts

FOMC members initially favored only one cut this year, but due to low US inflation, they shifted their view, aligning with the prediction for a September cut. High UK wage inflation and sustained GDP resilience are expected to prevent the BoE from making a cut.
The BoE is expected to make a decision soon, with the accompanying statement likely to maintain support for a cut.
CPI inflation being a tenth above the consensus may not affect the BoE’s decision, but a greater upside could influence them.

Sweden CPI Inflation 3.7% y-o-y (consensus 3.5%) in May-24

Sweden’s CPI inflation rate was 3.7% year-on-year in May 2024, a decrease from the previous 3.9%, indicating a cooling trend that is significantly below the 1-year average but 0.2 percentage points above consensus.
The CPIF inflation rate was relatively subdued at 2.3% year-on-year.
Modest increases in PPI and household lending suggest stabilizing input costs, signalling a cautious economic outlook.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

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Jun 14

Daily Brief Macro: Ban on Short Selling Stocks in Korea Extended Until March 2025 and more

In today’s briefing:

Ban on Short Selling Stocks in Korea Extended Until March 2025
China’s Economy Under a Hypothetical Case of Political Liberalization
CX Daily: Chinese Customers Sold on ‘Elixir of Youth’ Despite Expert Warnings
Fed Snap (Jun 12 Meeting): Current & Future Takeaways
China’s Long Property Bubble and Indebted Developers
Quant Signals: USDMXN
Macro Regime Indicator: Up, Up, Up still!
China: Five Headwinds To Long Term Growth
Nat Gas Prices to Fire Up on Rising Demand, Weak Production, and Shaky Geopolitics
Australia Unemployment Rate 4.0% (consensus 4.0%) in May-24

Ban on Short Selling Stocks in Korea Extended Until March 2025

By Douglas Kim

On 13 June, the Korean government announced that it will extend a ban on short selling stocks in Korea until end of March 2025.
For now, the government has not given a 100% go-ahead on the end of the ban on short selling stocks starting 1 April 2025.
However, in our view, the government is likely to allow short selling stocks in Korea once again, sometime in 2Q 2025.

China’s Economy Under a Hypothetical Case of Political Liberalization

Rumor has it that President Xi is swaying towards political liberalization
Facts are that there are too many local representatives with regional differences rejecting Xi’s plan
Economies will thrive and the current chips shortage maybe overcome under liberalization

CX Daily: Chinese Customers Sold on ‘Elixir of Youth’ Despite Expert Warnings

In Depth: Chinese customers sold on ‘elixir of youth’ despite expert warnings
Suspect arrested in stabbing of four American college teachers in China
Executive at ICBC’s Beijing branch investigated for suspected graft

Fed Snap (Jun 12 Meeting): Current & Future Takeaways

By Thomas Lam

Since the FOMC decision to remain on-hold in June was unsurprising, the emphasis was on the accompanying statement, dotplot and presser
The post-meeting statement tilted somewhat dovishly, but the 2024 median dot skewed more hawkishly
While a July rate cut remains remote, the odds of a September or November pivot have increased following the June FOMC

China’s Long Property Bubble and Indebted Developers

China policymakers’ deleveraging pressures on property developers have been supplemented by recent common prosperity measures to ensure that “housing is for living and not for speculation”.
This has raised concerns of a major property developer bankruptcy and questions of whether China’s highly valued property market could finally see a housing bust.
Chinese authorities have huge economic and political incentives to ensure that deleveraging pressure is followed by support as property developers deleverage.

Quant Signals: USDMXN

The case for a stronger MXNMXN sold off massively following the Mexican election last week but we still view the MXN as a clear-cut ‘trade balance’ play.
As long as the trade ties between China and the US increasingly necessitate a ‘value-add middleman,’ Mexico remains in an advantageous position, regardless of whether the president is Sheinbaum or Obrador.
Our PCA model reveals that USDMXN is trading very rich compared to macro factors.

Macro Regime Indicator: Up, Up, Up still!

In May we concluded that: “In May, our models hint of an “Up,Up,Up” environment in inflation, growth and liquidity, which is a decently positive indicator for risk assets, but also for broader reflationary trades returning through the month and into June.” The above conclusion has held true to a large extent and we went against the prevailing consensus driven by the “slowdonistas” when needed during the latter parts of April.
For June/July, we see an increasing liquidity trend from right about now, while the growth- and inflation cycle cyclically heats up still, while some lagged effects pull in the opposite direction.
From a market perspective, the overwhelming conclusion is that we will continue in an up, up, up macro regime referring to the liquidity cycle, growth cycle and cyclical price/inflation cycle.

China: Five Headwinds To Long Term Growth

The catch-up productivity argument would point towards 4-5% growth in China in the 2025- 2030 period.
We are concerned that the residential property downturn and rewiring of global supply chains will be persistent headwinds for China GDP growth in the coming years.
The switch to state socialism under President Xi means China is unlikely to have as much productivity pick- up as in Japan and South Korea in their earlier development stage.

Nat Gas Prices to Fire Up on Rising Demand, Weak Production, and Shaky Geopolitics

By Suhas Reddy

The EIA expects US natural gas production to fall by 1% in 2024 and lifted LNG price forecast for Henry Hub benchmark by 13% for the year.
OPEC’s 2024 global oil demand growth forecast unchanged at 2.25m bpd. But IEA lowered its projection to 960k bpd from 1.1m bpd.
Russia, Iraq, & Kazakhstan continued to oversupply despite lowering production MoM in May.

Australia Unemployment Rate 4.0% (consensus 4.0%) in May-24

Australia’s unemployment rate decreased to 4.0% in May 2024, with an addition of 39,700 jobs, demonstrating the resilience of the labour market.
Economic indicators show a split in recovery, with a strong service sector performance (PMI Services 52.5).
The robust service sector is offset by vulnerabilities in the manufacturing sector (PMI Manufacturing 49.7) and slow growth in consumer spending (retail sales 0.1% m-o-m in April 2024).

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

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Jun 13

Daily Brief Macro: US CPI Inflation 3.27% y-o-y (consensus 3.4%) in May-24 and more

In today’s briefing:

US CPI Inflation 3.27% y-o-y (consensus 3.4%) in May-24
CX Daily: Turning Research Into Revenue – China’s Quest to Bring Lab Inventions to Market
Iron Ore: Disappointing Data Pushed Price Down to 105, Bounce To 120 On Further Stimulus From China
UK: Structural Trend Imputation
EM Watch: Is China making a fool out of Western metals speculants?
Thailand Policy Rate 2.5% (consensus 2.5%) in Jun-24
US CPI Review – Admittedly a soft report, but NOT the new normal
India CPI Inflation 4.75% y-o-y (consensus 4.9%) in May-24
China CPI 0.3% y-o-y (consensus 0.4%) in May-24

US CPI Inflation 3.27% y-o-y (consensus 3.4%) in May-24

US CPI inflation for May 2024 was reported at 3.27% year-on-year, the lowest growth rate since February 2024, and slightly below the consensus estimate and the previous month’s figure.
Despite a decrease in headline inflation, core CPI inflation remained stable at 3.4% year-on-year.
This stability in core CPI inflation is due to persistent producer price pressures, indicating sustained underlying inflationary pressures.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

CX Daily: Turning Research Into Revenue – China’s Quest to Bring Lab Inventions to Market

Cover Story: Turning research into revenue – China’s quest to bring lab inventions to market
Peru amends law allowing Cosco Shipping to retain exclusive rights to operate Chancay Port
In Depth: How Hong Kong could help craft mainland policies for digital assets

Iron Ore: Disappointing Data Pushed Price Down to 105, Bounce To 120 On Further Stimulus From China

By Sameer Taneja

Iron ore continued to operate in its band from 95-130 USD/ton over the last few years, with a recent drop from 120 USD/ton to 105 USD/ton on tepid China data.
With incremental news on China’s stimulus in the property and infrastructure sectors, we remain confident that iron ore will return to 120 USD/ton in the short term.
We also remain bullish on the 65-62 spread, which has expanded to the teens. Rio Tinto Ltd (RIO AU) and Vale (VALE US) are good plays on the spread.

UK: Structural Trend Imputation

Sustaining the Q1 rebound in April suggests economic trends have improved in 2024 to about 0.3% q-o-q for demand and 0.4% for supply amid slightly rising unemployment.
The fading positive supply shock from falling energy prices should slow those trends before policy aligns at neutral such that both trends converge at 0.3% q-o-q in 2025.
Easing before expectations have re-anchored with the target risks excessively high inflation, compounding the UK risk of rates reversing higher relative to other countries.

EM Watch: Is China making a fool out of Western metals speculants?

Hot on the heels of watching Powell’s press conference, which pushed back slightly against renewed rate-cut optimism, it’s clear that the Fed is playing a cautious game.
Despite the soft inflation data this morning, they significantly changed the dot plot.
They likely believe the CPI report was noisy due to a sudden deflation in transportation.

Thailand Policy Rate 2.5% (consensus 2.5%) in Jun-24

The Bank of Thailand maintained its Policy Rate at 2.5%, with a 6 to 1 vote, reflecting a cautious approach amid structural challenges and ongoing economic uncertainties, particularly in the export sector.
It projects economic growth at 2.6% in 2024 and 3.0% in 2025, driven by strong domestic demand, tourism recovery, and accelerated government disbursements, while structural impediments continue to weigh on export performance.
Inflation should gradually increase towards the target range by the fourth quarter of 2024, with headline inflation projected at 0.6% for 2024 and 1.3% for 2025, necessitating careful monitoring of external and domestic factors that could influence inflation dynamics and future policy decisions.

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US CPI Review – Admittedly a soft report, but NOT the new normal

The CPI report today was admittedly softer than our initial hawkish forecasts, with headline coming in unchanged at 0.0% MoM vs 0.1% expected while core came in to the soft side of 0.2% MoM vs 0.3% expected.
Our anticipation of rising goods-flation didn’t play out fully, and while shelter re-accelerated as we forecasted, core services disinflated heavily in May due to auto insurance costs declining.
The main culprit behind the dovish CPI report was the sudden drop in Motor Vehicle Insurance (chart 2.b), which has so far been printing at trend MoM levels around 1-1.5%, lifting headline inflation by 0.03-0.05% consecutively.

India CPI Inflation 4.75% y-o-y (consensus 4.9%) in May-24

India’s CPI inflation for May 2024 was 4.75% year-on-year, lower than the predicted 4.9%, and the lowest since May 2023.
There has been a slowdown in CPI inflation and subdued wholesale price movements, especially in the manufacturing sector.
This suggests a potential easing of inflationary pressures, which could provide economic relief and lead to adjustments in monetary policy.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

China CPI 0.3% y-o-y (consensus 0.4%) in May-24

China’s CPI remained stable at 0.3% year-on-year in May 2024, indicating modest inflationary pressures.
Despite this stability, the CPI was slightly above the one-year average.
Other economic indicators, such as declining new house prices and robust monetary and credit growth, suggest potential future inflationary dynamics.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

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Jun 12

Daily Brief Macro: CrossASEAN Ground Zero – Grab’s ESG Credentials and more

In today’s briefing:

CrossASEAN Ground Zero – Grab’s ESG Credentials, Vinfast in Indonesia, Digital Payments, and Evermos
Energy Cable: The oil market is OVERLY pessimistic by now..
Great Game – Can the European Right leverage their victory?
[ETP 23/2024] Jittery Crude And Fiery Natural Gas Markets Defined Energy Markets Last Week
UK: Labour Market Rates Peaking

CrossASEAN Ground Zero – Grab’s ESG Credentials, Vinfast in Indonesia, Digital Payments, and Evermos

By Angus Mackintosh

This week we look at Grab’s ESG qualities and its recent report along with Vingroup’s plans to start EV ride-hailing in Indonesia on top of Vinfast‘s commitment to manufacturing.
We also look at how the digital payments space is developing in Indonesia and Vietnam with Momo and Evermos’s differentiated social commerce strategy in Indonesia helping to foster entrepreneurialism.
CrossASEAN Ground Zero is a thematic weekly product that focuses on key Southeast Asian themes and technology trends with a core focus on Indonesia.

Energy Cable: The oil market is OVERLY pessimistic by now..

By Ulrik Simmelholt

Take aways: Alignment in OPEC is crumbling but the short-term risk-reward is
STRONG Riyadh Accord coming to the rescue? Natural Gas markets remain tight and the bullish price action CONTINUE.
Another week of increasing freight rates OPEC’s cohesion is becoming increasingly fragile due to the necessity for deep supply cuts to sustain oil prices.

Great Game – Can the European Right leverage their victory?

By Mikkel Rosenvold

Welcome to this weeks Great Game, which is obviously very much focused on the European elections.
We also cover the ongoing EV war and the massive heatwave in India, which could have huge ramifications for certain commodities.
Right-Wing Swing in European Parliament Elections.

[ETP 23/2024] Jittery Crude And Fiery Natural Gas Markets Defined Energy Markets Last Week

By Suhas Reddy

Crude oil prices crater as OPEC meeting outcome fails to support oil prices. Despite OPEC+ extending larger cuts until end-2025, prices fell on fears of excess supply.
Henry Hub Gas prices rose sharply last week driven by expectations of a hotter-than-expected summer in the US & Outages in Norway.
Energy majors fell sharply on 3/June and ended the week in the red. BP and Exxon Mobile were downgraded. Berkshire ramped up holdings in Occidental.

UK: Labour Market Rates Peaking

The UK unemployment rate increased to 4.4% in April amid residual seasonality nearing its peak. Underlying changes are also shrinking so it may not go significantly higher.
Stabilisation in vacancies and still-low redundancies should prevent a new fundamental shock from depressing labour market activity.
Total pay growth exceeded expectations again, albeit owing to revisions that skew higher. The slowing to 0.4% m-o-m may also be revised up, but suggests slowing in May.

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Jun 11

Daily Brief Macro: Malaysia Economics: Is “Digital Tiger” Malaysia About to Roar Again? and more

In today’s briefing:

Malaysia Economics: Is “Digital Tiger” Malaysia About to Roar Again?
The Week at A Glance: Everything you need to know ahead of the FOMC and CPI
Indonesia Economics: New Capital Faces More Than Just Personnel Woes
Champion Iron (CIA AU): Q4 Results Update and Future Outlook
Yield Curve Inverts Further on Rising Recession Risk
Why China loves Gold & a Beautiful Setup in Bitcoin
The Week That Was in ASEAN@Smartkarma – Alfamart Uncut, CP Axtra Revealed, and Jardine Matheson
UK Politics: Labour’s Energy Policies

Malaysia Economics: Is “Digital Tiger” Malaysia About to Roar Again?

By Manu Bhaskaran

After a period of economic and political turbulence, Malaysia is now re-entering the spotlight, performing admirably in attracting technology-focused investments.
The success in luring semiconductor and data centre investments is not down to pure luck; policymakers have worked hard to ensure that the country friendly to global tech business.
If momentum on business investments and policy reform can be maintained, the country may be on the verge of a virtuous cycle that helps it escape the middle-income trap.

The Week at A Glance: Everything you need to know ahead of the FOMC and CPI