Busiest week ever for European bond primary market!
With one day to go, corporate financing via the Europe's public bond market has reached a record weekly level with over $100 billion of debt printed to date. Source: Bloomberg
Is the Bank of Japan losing control of its bond market?
The Japanese yen soared overnight after Japan's Yomiuri reported that the BoJ is to review the side effects of its massive monetary easing at its policy meeting next week and may take additional steps to correct distortions in the yield curve, i.e there is a chance the BOJ will once again "surprise" the market with yet another Yield Curve Control tweak. JGB 10y has penetrated the 0.50% cap, reaching 0.568%. The USDJPY had tumbled as low as 128.66 from 132 yesterday, before bouncing modestly just above 129. Source: www.zerohedge.com, Bloomberg
While inflation is cooling down, The Fed might need to keep tightening
While US inflation is materially lower from its peak, the chart below from Trahan Research shows why the Fed's job is probably NOT over. This chart shows the contribution of both Services and Goods inflation. Even if Goods CPI goes to 0% , Services inflation alone would still leave Core inflation above 5%. As long as core inflation stays above 5%, the Fed is unlikely to pivot.
US CPI has moved down from a peak of 9.1% last June to 6.5% in December
What's driving that decline? Lower rates of inflation in New/Used Cars, Gasoline, Apparel, Medical Care, Food at Home, Gas Utilities, and Fuel Oil. Source: Charlie Bilello
Metals have been on fire since China pivoted on Covid policy.
Source: Bloomberg | David Ingles
The gold stocks-to-S&P 500 ratio just broke out from key resistance
Source: Crescat Capital, Bloomberg
Why investing into the "next big thing" can be dangerous
Source: Compounding Quality
Italy's 10y risk spread over Germany narrows to the lowest level since April 2022
Source: Bloomberg
