A quick look at a recent rebound in a few measures of US business sentiment. And the perils of backtesting.
US goldilocks. China structurally weak. Election is Trump’s to lose or Kamala’s to win. BOJ slow playing hike. USDCAD near resistance. Vol likely to go up in August.
We are in a period of equilibrium here with the September FOMC meeting priced for a rate cut and the dispersion around that view rapidly narrowing.
I see many reasons to be long FX vol but not many reasons to be short.
USDJPY is generally a US yields trade, but it’s got some weird energy these days.
Low volatility is the big story, despite wacky and wonky pockets of vol here and there. Wake me up after the election (when September ends).
Prior 2%+ counterintuitive reactions to CPI had a 10-to-15-day half-life as they signaled exhaustion in either direction four out of four times. Also: The MOF is getting fancier.
There is an asymmetry in CPI, but not in USD positioning. Intriguing.
It makes sense that Huw Pill will declare mission accomplished tomorrow, and signal an August 1 cut from the Bank of England.
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