Bitcoin’s resurgence, AI’s ascent and the US dollar’s December slump
This week's chart pack covers the following topics:
Inflation heats up in food and transportation as Fed policy shifts
Macrobond users can click here to access the chart and gain deeper insights into the data.
What the chart shows
This heatmap visualizes US Consumer Price Index (CPI) inflation trends over the past year, broken down by key categories and subcategories. Using a color gradient based on Z-scores, it highlights the relative intensity of price changes within each category. Darker shades of red signal higher inflation compared to historical observations, while blue denotes easing pressures.
Behind the data
In November, inflation rose to 2.7% year-over-year, continuing its upward trajectory since the Federal Reserve began cutting interest rates in September in response to cooling prices. Key drivers of this uptick were surging prices in food categories – particularly meats and non-alcoholic beverages – and increased costs for apparel and public transportation. While shelter remains a significant contributor to overall inflation, its rate of increase moderated slightly, declining from 4.9% in October to 4.7% in November. These shifts underline persistent price pressures despite recent monetary easing.
Bitcoin tops asset class rankings again
Macrobond users can click here to access the chart and gain deeper insights into the data.
What the chart shows
This chart highlights the annual performance of 14 distinct asset classes over the past decade, ranking them from best to worst for each year. Each asset class is represented by the same color, making it easy to track trends over time. The percentage figures beneath each asset class indicate its total annual return for the respective year, providing a quantitative measure of performance. This chart helps investors identify performance patterns, spot resilient assets and assess long-term relative returns.
Behind the data
Bitcoin has emerged as the top-performing asset in 2024, driven by a surge following Trump’s election victory. True to its reputation as a volatile and “binary” asset, Bitcoin claimed either the top or bottom spot in annual rankings throughout the past decade – it was the worst performer in 2022. This year’s strong performance highlights its high-risk, high-reward nature, maintaining its appeal as a speculative and growth-focused investment.
Sector weight harmonization narrows US-Europe valuation gap
Macrobond users can click here to access the chart and gain deeper insights into the data.
What the chart shows
This chart compares the 12-month forward price-to earnings (P/E) ratios of the MSCI Europe and US indices against their counterparts adjusted for harmonized sector weights, aligned to the sector composition of the S&P 500. The comparison is shown over time to highlight how sectoral differences influence valuation metrics. This underscores the importance of accounting for sector composition when assessing valuation spreads between regions.
Behind the data
The P/E ratio is a key leading indicator for investors, but aggregated comparisons can be misleading without considering regional characteristics. In this chart, the standard P/E spread between the US and Europe is nearly 10%. However, when sector weights are harmonized to align with the S&P 500, the spread narrows to 6.5%. This adjustment highlights how the higher weighting of high-valuation sectors in the US skews standard comparisons, offering a more nuanced view of relative valuations.
2025 H1 Outlook: What investors should expect
Macrobond customers chart their predictions for the second half of the year.?
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