itscorrekt

🇺🇸Summary on CPI Print 📱https://x.com/itscorrekt/status/1955458203619373075 #macro#inflation

🇺🇸On US Dollar Weakness and Scarcity 📱https://x.com/itscorrekt/status/1942394999846625708 #macro#dollar

📈On Long-Term Government Bond Yields 📱https://fixupx.com/itscorrekt/status/1925434326566805614 #macro#rates

🇺🇸US Leading Indicator Index US leading indicators continue to point towards a higher probability of recession 📱https://fixupx.com/itscorrekt/status/1924676886095167504 #macro

🍊 On Trump's Tax Cuts 2.0 📱https://fixupx.com/itscorrekt/status/1922958611178979751 #macro#tax_cuts

Started off as a post on the magnitude of the 🇩🇪 German fiscal spending plan on defense and infra But think there are some very relevant connections to the price action in the 🇺🇸 US stock markets due to the re-routing of capital flows away from the US back into 🇪🇺 Europe and 🇨🇳 China Long long thread so read if its useful to form a macro picture of equity markets across a few geographies 📱https://fixupx.com/itscorrekt/status/1905193242678935560 #macro#views

🤔Some weekend thoughts ∘ on Cem Karsan's QE interview: 📱tweet ∘ change in US treasuries holder composition: 📱tweet Have a good weekend #macro

Short thread on the "Mar-a-lago Accord" https://fixupx.com/itscorrekt/status/1894708248193999200 #macro

📱post on 2025 projections on US economy by one of my fav research analyst warrenpies Kinda like it for slightly HTF (mid-end Q1?) but more bullish for crypto and momo stocks LTF #x#macro

Stocks and Commodities 2024 Performance ∘ US Stocks: Best = $MAGS, Worst = Materials (see attached) ∘ Commods: Best = Cocoa, Worst = Wheat #macro

🇺🇸 On CPI Tonight ∘ Core CPI expected to remain above 3% for October ∘ Median expectations by economists puts it at 3.3% while the Fed wants it ideally below 3 ∘ Core PCE is lower fortunately ∘ Consumers' expectations from surveys however differs significantly from mkt long bond implieds ∘ 1Y expectations firmly below 3% ∘ 3Y expectations even lower closer to 2% #macro

🇺🇸On US Rates Term Premium As promised in the mkt update post here, here is another good reason for the increased volatility of the US yield curve ======================== ∘ US treasury yields are rising on several reasons: 1) the US economy is much stronger than expected ➜ employment numbers strong + economic output consistent ➜ mkt revise down the number and speed of Fed rate cuts 2) inflation, particularly structural long-term inflation, fears remain high ➜ inflation prints remain hot ➜ Trump, if elected, expected to fan inflation. Trump is for tariffs, against immigration and amendable to big tax cuts: all inflationary longer term 3) the enormous fiscal deficit of the US govt ➜ US debt spiralling out of control with no solution in sight 4) yields term premium is increasing 🔥 (this is the subject of the post) ➜ "term premium" refers to extra return Treasuries investors require to bear the risk that rates may change over the life of the bond. It does not include the short-term expectations of the Fed's policy setting ➜ the term premium is historically positive but turned negative since 2018 as a result of ZIRP 🔥 Now this term premium is turning positive again (see attached) and drawing more attention from monetary policy makers. Fed do not need to cut in Nov and Dec @joe_lavorgna shows in his chart (see attached) that the 10Y Treasury yield is rising in tandem with the ACM term premium over the past month ∘ this suggests that the rise is largely driven by the term premium ∘ instead of expectations of higher future short-term rates ∘ this then reduces the need of the Fed to cut further in Nov and beyond as a response to mkt's expectations of her policy intentions ∘ this can cause a reflexive upswing in long rates when policy rate hesistancy can result in a reprice of the yield curve front end which pressurizes the long end which further drives up the term premium The Term Premium, Rates Volatility, Demand/Supply and Inflation @crossborder_capital says the term premium is made up of: ∘ rates volatility ∘ demand/supply dynamic of treasuries ∘ inflation expectations 🤔 and each of these components are in-turn effected by the factors 1) to 3) stated ☝️so the reasons for rising long rates are multi-faceted and interconnected. The potential of a sweep by the Republicans in Congress and the accompany sea-change in monetary and fiscal policies, potential of a upcoming recession in the US etc. are all reasons for a steeper and more volatility yield curve going in 2025 and beyond. The concept of a term premium for the US yield curve will be a useful tool to complement our consideration of US interest rates. Hope its useful. Have a good weekend. #rates#macro#views