Navigating The Narrow Path
Ian Reynolds
Investing and Trading | Capital Markets | Macroeconomics| Bitcoin & Decentralised Finance | Helping to Find the Money Flow | Commentator | Speaker
Navigating the narrow path towards a soft landing seems more elusive than ever. Gone is the deflationary bust leading to recession, we're now presented with an inevitable stagflationary global economy. Persistently higher inflation and low growth, and global trade is dramatically slowing already.
The narrative from central banks and economists:
See below for J Powell FED speech.
Trouble in US Government Debt
The relentless rise in long-term US Government debt, a whopping 4% in one year for the 10 year note, confirms the market's belief for lower inflation, and therefore short-term interest rates, is over. The US Bond curve is in motion and if it normalises with the 30 year at 7% plus, there is going to be a load of pain in corporate debt and Government interest payments in the US, and significant demand destruction in Australia and Canada where floating rate mortgages are much more common than in the US.
Liquidity in Markets
There are lots of contradictory comments of the liquidity of markets and the economy.?
Liquidity of collateral is the key domino in a crash. Who owns the collateral in a credit crunch. That collateral is US Government bonds.
Japan
With the FED's higher for longer and BoJ's looser for longer policies, we're looking at USD/YEN where is what back in 1998. The MoF and BoJ will be intervening soon but can it be anything more than a smoothing operation ?
Canada / India
Watch this. A lot of people paying very close attention. India, a formation BRIC's member but also a big consumer of coal and supposedly the world new economic driver, now China has blown up.
领英推荐
In Case You Missed It
Us Federal Reserve,? Bank Of England and the? Bank of Japan all met this week to set rates, FED and The Old Lady held and BoJ kept loose policy until inflation stays consistently above the BoJ target. Watch Powell below for the language of of a body not wanting to lose face by losing control of inflation.
Japan's imports in August support the slowing global trade narrative.
Japan CPI August 2023 higher then expected.
Canadian CPI surprised the upside as well
Australia
The RBA Latest Minutes [RBA] are full of the price of oil and the state of the Chinese economy. There are record A$ shorts on CFTC, A$ futures, and with the increase in the price of iron ore, don't be surprised if we get a big squeeze higher.
The restructuring of the RBA board is a cause for concern, as is the Government's failing referendum.?
This Week's Important Economic Indicators [London time]
Key Economic Releases:?https://suberia.capital/economic-indicators-by-country
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