In today’s briefing:
- Positioning Watch – Preparing for (dis)inflation?
- What Next for US Equity-Bond Yield Correlations? Fiscal & Monetary Policy Conduct Takes Centre Stage
- The Soft Landing Vs. Slowdown Debate
- Steno Signals #57 – What on earth is going on with the USD?
- What to Watch For in a Pivotal Earnings Season
Positioning Watch – Preparing for (dis)inflation?
- Welcome back to the weekly Positioning Watch, where we crunch through the positioning data and point out the biggest positioning trends in global markets.
- Main takeaway: Bond bears had a significant setback this week following a mild inflation report – and that comes after a substantial surge in yields the previous week.
- Now, we eagerly examine the market’s repositioning here in the aftermath of the reversal.
What Next for US Equity-Bond Yield Correlations? Fiscal & Monetary Policy Conduct Takes Centre Stage
- The correlation between US bond yields and equity prices has shifted over time and has been heavily influenced by changes in the inflationary backdrop and Fed policy credibility.
- Bond investors have embraced a secular stagnation thesis for the US economy (low growth and inflation), putting them on collision course with the Fed about the appropriate conduct of policy.
- Prospective fiscal policy conduct could have a major impact on the correlation between bond yields and equities as testified by the events of October 1987.
The Soft Landing Vs. Slowdown Debate
- Team Soft Landing and Team Slowdown are engaged in a cage match
- Incoming data in the coming weeks will decide the winner.
- In the short run, the market is overbought and posed for a period of consolidation or correction.
Steno Signals #57 – What on earth is going on with the USD?
- Happy Sunday and welcome to our weekly flagship publication “Steno Signals”.
- We have had a great week trading-wise except for being stopped out in our EUR/USD shorts and we find the price action in the USD extremely interesting to assess.
- Could the moves we see in FX space be a harbinger of an unexpected cyclical rebound?
What to Watch For in a Pivotal Earnings Season
- The upcoming Q2 earnings reporting season could be pivotal for investors.
- The direction of the economy and the earnings outlook could go either way. There are many questions but no definitive answers.
- We offer some signposts to watch for clues to future market direction.
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