Mar 12, 2018 | Leading Indicators, Uncategorized, US Economy
A key risk for investors remains an US inflation overshoot. US inflation breakevens have been rising since the start the year (top-left chart), however we believe this is more a reflection of market pricing returning to fair value than the start of a self-perpetuating...
Feb 15, 2018 | US Economy
This post is taken from our January 30th weekly report. The dollar broke through the critical 90 level on the DXY, after comments from US Treasury Secretary Steven Mnuchin supporting a weaker dollar. (The timing of the comments at such an important level we don’t...
Dec 14, 2017 | European Economy, US Economy
Real rate differentials continue to suggest EURUSD has more downside. We have two ways of looking at real rate differentials. The top left chart shows the 2 year rate differentials deflated using CPI. The top right chart takes the same data but also divides the real...
Nov 18, 2017 | Global Economy, US Economy
We continue to see a higher dollar as the path of least resistance into year end. In addition to extreme short positioning and some buy signals that we have flagged over the past few weeks, a number of other supportive factors are starting to come into play. The...
Oct 27, 2017 | US Economy
A real yield curve is an indicator of risk appetite. Persistently negative real yields are often a precursor to extended levels of leverage and credit bubbles. When they start to rise they point to tightening financial conditions which stresses firms’ equity, causing...
Oct 23, 2017 | US Economy
In August, we had reviewed a few charts showing that US high yield valuations were divorced from fundamentals, as well as to other yield products. This week, refreshing those charts, we can see that things are just as bad. US high yield seems to be the most vulnerable...
Oct 14, 2017 | US Economy
Falling liquidity was one of the principal reasons behind our call for a flatter US yield curve this year. Excess liquidity often drops towards the end of an expansion. At the same time the relative demand for credit falls, while the central bank is reacting to...
Sep 11, 2017 | US Economy
The DXY index has fallen in a straight line this year, with the Sharpe ratio of the YTD move at almost 2.4. Although we have been bearish on the dollar from a macro point of view since last year, the dollar does look vulnerable at present to a short squeeze. The top...
