inflation Archives - Variant Perception

EUR: Tactically Overbought; Macro Headwinds

Jun 16, 2017 | European Economy

Macro headwinds are building up for long EURUSD positions in addition to signs that EURUSD is becoming very overbought technically. A few weeks ago we noted that EURUSD sentiment was one of the most bullish (contrarian indicator) among the 50 major FX pairs we track....

BoJ Underscores Support for USDJPY

May 19, 2017 | Japan

Data and policy continue to line up for a weaker JPY. Kuroda has re-iterated his commitment to stimulus, stating, “it’s premature to discuss in an exact way about exit strategy”. Kuroda continues his battle against the deflation mindset; and, as the top chart shows,...

Chinese Excess Liquidity Rolling Over

Apr 7, 2017 | China

Chinese excess liquidity does a good job of leading asset prices as well as China-related commodities. We define excess liquidity as M1 money growth minus Inflation minus economic growth. This captures how much excess money there is beyond what the real economy can...

Rising Inflation in China

Mar 10, 2017 | China

PPI in China has swung from deflation to relatively high inflation over the last 6 months. Wholesale prices are rising fast, import prices are also rising due to the lagged effects from a weaker yuan are moving sharply higher. (CPI, especially core CPI, had been...

The Dark Side of Reflation

Feb 17, 2017 | US Economy, US Equities

Higher economic growth usually translates into higher bond yields, higher stocks and rising oil prices; but, too much of a good thing is bad for stocks. Over the past few weeks, we’ve shown that our stock/bond RSI signal has triggered. We now have an Inflationary...

Higher Inflation Expectations to Favour Equities over Bonds

Nov 28, 2016 | US Economy

(from our Tactical of November 8th 2016) Bond yields have been rising in most countries, and yield curves have steepened across the developed world. As the top chart shows, the rise in nominal yields has come from a rise in inflation breakevens, while real yields...

Euro to Remain Better Supported

Nov 4, 2016 | European Economy

(from our Tactical of 18th October 2016) One currency that may buck the trend and remain supported against the dollar is the euro. Although tapering from the ECB does not look imminent, core inflation may start surprising to the upside in the eurozone. The chart...

Real Yields Wildly Mispriced Given Stagflation Light

Oct 7, 2016 | US Economy

The US now has the worst combination of outcomes, poor growth and rising inflation. Bond yields are now the most negative they have been in almost forty years. Only in the 1970s during stagflationary episodes were real yields this negative. We don’t see a high...

Bond Yields Diverge from Inflation

Aug 24, 2016 | US Economy

Bond yields are currently diverging in a very big way from economic fundamentals, and our valuation tools point to a rise in yields. Normally, there is a very tight correlation between the change in the ISM prices paid survey and the changes in the 10 year yield. ...