Daily Brief Macro: Macro Regime Indicator: MORE liquidity is coming and more

• Greetings and welcome to this month’s Macro Regime Indicator.
• Financial markets have behaved pretty much just as we laid out in last month’s predictions.
• Sentiment remains strong and the US consumer continues to spend.

• Gold and Silver have remained unresponsive to lower rates, escalating geopolitical risks and higher China and India seasonal demand.
• Notably, early February saw the emergence of two contrarian signals that merited closer attention.
• While these signals are not foolproof market timing tools, they warrant attention when they align with technical support levels within an established consolidation pattern.

• Hello everyone, and welcome to our ‘5 Things We Watch’, where we as always provide you with 5 things that we find particularly interesting in the world of global macro currently.
• This week we are watching out for the following 5 topics within global macro: Natural Gas, ECB, Crypto, Liquidity, Positioning.
• Natural Gas has really not been the place to be for a long time, as hotter weather and prudent storage dynamics has left supply WAY greater than demand.

• Welcome to this week’s edition of our EM-angled editorial, which comes hot on the heels of the PBOC Key Ministry Briefing.
• So, where better to turn first than China?
• Findings in brief: More stimulus for the Chinese economy and markets; Spill-overs to manufacturing/China sensitive geographies and currencies; Both EM (particularly Asian) equity and FX appear cheap.

• The UK Budget should be the last fiscal statement before the general election. It merely sold more of the same fiscal approach, measures, and political focus to weary voters.
• A fiscal windfall was spent on a national insurance tax cut in an ongoing effective reconfiguration from income tax. Non-dom reform steals a bad Labour policy.
• Challenges for the next Labour government are increasingly severe but not scaring markets. Loose fiscal policy is sustaining the need for relatively high interest rates.

• Global wheat prices have been defying expectations and have continued on a downward trend since the start of 2024
• Russia is expected to have a high wheat production of over 90 million tons in 2024 due to favorable growing conditions
• Ukrainian wheat exports are expected to improve with better logistics and an estimated production of nearly 20.5 million tons in the 2024-25 season

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• The Bank of Canada’s decision to hold the policy rate at 5% aligns with economic consensus. It was influenced by a global economic slowdown, easing inflationary pressures, and modest domestic growth below potential.
• Despite CPI inflation moderating to 2.9%, concerns over persistent core inflation and elevated shelter costs underscore the need for continued vigilance. The Bank anticipates inflation to stay close to 3% in the near term before gradually easing, with a full return to the 2% target expected by 2025.
• The Bank remains open to adjusting the policy rate if inflationary surprises occur. Its current focus is on monitoring wage growth, demand-supply balance, inflation expectations, and corporate pricing behavior. The decision process incorporates domestic conditions and global economic dynamics, ensuring readiness to act to maintain price stability.