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  1. Equities and the MacroSphere: Fed Shows Its Cards

    John Tierney

    Summary The good news is the Federal Reserve (Fed) has all but promised to deliver three rate cuts in 2024 even if inflation remains slow to drop. The bad news is this was already priced into the market. With the 2Y Treasury yield still trading above 4.5%, there is little visibility now on whether or […]

  2. G10 FX Weekly: EUR/CHF Upside Done, USD/JPY Downside Due

    Richard Jones

    Summary This week saw a torrent of central bank rate decisions, highlighted by the Bank of Japan (BoJ) ending its negative interest rate policy (NIRP). Also, the Swiss National Bank (SNB) surprised markets by cutting rates by 25bps. The US Federal Reserve (Fed) and Bank of England (BoE) kept policy steady with comparably less fanfare, […]

  3. FOMC Review: Fed Sees Disinflation Glass Half Full

    Dominique Dwor-Frecaut

    Summary As I expected, the Federal Reserve (Fed) stuck to its narrative of continued but slower disinflation and kept three cuts in 2024. Fed Chair Jerome Powell also made it clear the Fed would not attempt to cap growth to accelerate disinflation. Powell also indicated a quantitative tightening (QT) taper was likely to start soon. […]

  1. 3 Takes From Our AI Model on Powell’s Press Conference

    Bilal Hafeez

    We have been building a series of AI models that interpret central bank speeches. Unlike many existing models, ours use the full capabilities of ChatGPT (rather than older BERT models), and we go beyond analysing just sentences. It is still a work-in-progress, but here are three takes on yesterday’s Powell presser: Powell’s remarks and Q&A […]

  2. Markets to Watch: USDJPY To Rise Despite BoJ Rate Hike

    Bilal Hafeez, Viresh Kanabar

    Summary We think the Fed will stay on hold and keep three 2024 cuts in their forecast when they meet on Wednesday. The Bank of England will also likely keep rates steady, with CPI dictating the tone. Yet Tuesday’s BoJ meeting could bring the first hike in a generation following the strongest shunto wage negotiation […]

  3. Equities and the MacroSphere: Ides of March Brings More Uncertainty

    John Tierney

    Summary With the Ides of March over, investors are pondering the implications of last week’s hot inflation prints and another runup in Treasury yields. Our take is that equities stay in a narrow range until either inflation cools or the economy/employment slows, giving the Federal Reserve (Fed) cover to cut rates. Oracle Corp. caught a […]

G10 FX Weekly: Short CHF Stands Out as Central Bank Flurry Approaches

Richard Jones

Summary In the next seven days, six G10 central banks provide monetary policy updates. Excepting the Bank of Japan (BoJ), no interest rate moves are expected. Markets are therefore largely in wait-and-see mode, with most G10 currencies in a range, presenting very few attractive trades. Market Implications One exception to this is being short the […]

FOMC Preview: Fed to Stick to Its Narrative

Dominique Dwor-Frecaut

Summary The Federal Reserve (Fed) is likely to stay on hold and keep three 2024 cuts. This is because recent data indicates that January was a one-off inflation increase not the start of an upward trend. The Fed could lift its growth forecast but this would not impact the Federal Funds Rate (FFR) trajectory as […]

  1. Equities and the MacroSphere: AI Dreams Deferred, Again

    John Tierney

    Summary We continue to see tech company outlooks come up short, with hopes for an AI bonanza delayed to later this year. Investor disappointment helped fuel Friday’s equity selloff. In the retail sector, discount and off-price vendors report strong beats and good outlooks, while full price companies are struggling. Regardless of outlook, most retailers said […]

  2. G10 FX Weekly: Respect US Rates Ranges Ahead of Huge Event Risk

    Richard Jones

    Summary US 2-year and 10-year yields have range-traded year-to-date (YTD). US yields in both curve points have retraced slightly lower this month after sharp moves higher in February. We think the US jobs report tomorrow will be the catalyst for the next directional move in the US rates market, with the next Federal Reserve (Fed) […]

  3. Will the Residential Recovery End Disinflation?

    Dominique Dwor-Frecaut

    Summary The ongoing residential investment recovery is too small to discernibly impact housing supply and cap housing inflation. Yet it is adding to aggregate demand and could create resource pressures. The risks are finely balanced. On one hand, the US housing shortage supports a strong residential recovery. On the other, Fed support has been much […]

Bilal’s Macroscope: Equity Performance Split By ‘Rate Sensitive’ and ‘Rate Agnostic’

Bilal Hafeez, Viresh Kanabar

Summary Momentum, growth, and quality have all outperformed the market in the last six months due to exposure to companies with strong earnings growth and profitability. These factors have also exhibited the least sensitivity to changes in bond yields recently, as the market gives more importance to higher cash flows than the discount rate. Market […]

Equities and the MacroSphere: How Strong Is Consumer Spending in 2024?

John Tierney

Summary In a disappointing week for companies pinning their hopes on AI, three major players cut their 2024 outlooks. It may be a while before AI becomes a widespread profitable business model. Most regional banks rallied modestly after the latest New York Community Bank (NYCB) revelations and writedowns, showing NYCB is on its own now. […]

  1. Markets to Watch: Watch Out For ‘More Good’ Jobs Data

    Bilal Hafeez, Viresh Kanabar

    Summary In the US, Powell’s congressional testimony (Wednesday) will likely stress the need for more good inflation data before the Fed can cut. Nonfarm payrolls and wages (Friday) are likely to surprise on the upside. In Europe, the ECB should keep rates steady on Thursday but revise forecasts. We still expect a June cut at […]

  2. Equity View: Earnings Reports Portray Strong Consumer, Year for Rebuilding

    John Tierney

    Summary We review the key macro themes emerging from Q1 earnings season. No companies are talking about recession risks now. But their outlooks are also mostly consistent with sluggish 1.5-2.0% GDP growth. Consumers are spending on staples and discretionary services but are still not buying goods. AI hardware may be red hot, but the broader […]

  3. G10 FX Weekly: EUR/USD Going Nowhere Fast

    Richard Jones

    Summary Two weeks ago, EUR/USD traded down to the bottom of its YTD range of ~1.0700/1.1100, the lowest level since mid-November. Strong US data prints and hawkish Fed messaging drove the USD outperformance. Recently, however, buoyant risk sentiment and rallying equities have supported the euro, which is trading like a risk-on/risk-off currency. Downside momentum in […]

America’s Turbo Economy

Dominique Dwor-Frecaut

Summary Business spending generates household income and spending and, in turn, more business spending. A very low savings rate on the household side and the Biden administration’s industrial policies on the business side have turbocharged this positive feedback loop. So far, the turbo economy has not caused overheating, largely due to high profits and a […]

Equity View: Nvidia Is No Cisco

John Tierney

Summary A currently popular meme chart shows a startling match between Nvidia’s (NVDA) recent rise and that of Cisco Systems (CSCO) in 1999-2000. Cisco later collapsed over 80% when the dot-com bubble burst. NVDA is no CSCO. While CSCO was mostly selling to companies financed with VC cash without a business model, NVDA caters to […]

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