Gustav Helgesson

The market has removed more than a full rate hike in the UK, EA and Sweden after today's ceasefire, but still expects 1-2 hikes before the end of the year.

TACO TIME

Should central banks hike rates into an oil supply shock, which raises inflation and hurts growth? The market certainly thinks so. In the UK, despite weak economic activity and rising unemployment, the market has repriced the BoE from 2 cuts this year to 1.5 hikes(!)

The Brent/DME Oman spread is flashing stress signals even as Brent holds a relatively stable range this week. If supply disruptions persist, watch DME Oman. It'll tell you where Brent is really heading.

Government bond yields are rising more than interest rate swaps in high-debt economies such as USA, UK and France. No safe-haven bid there. The opposite is seen in more fiscally prudent Germany and especially Sweden. Interestingly Japan is also doing ok.

A prolonged disruption to global energy markets looks increasingly likely. In our report on the Iran war, we lay out two inflation scenarios. In the nastier one, the first-order impact raises headline inflation to 4% in US and EA. Read more here: research.sebgroup.com/macro-ficc/rep…

Is the US entering a productivity miracle?​ Incoming Fed Chair Kevin Warsh thinks so, that an AI-led boom creates disinflationary room to boost growth AND cut rates simultaneously. Q4 surprise reinforces supply-side economists like Warsh. But AI still has a lot to prove.

Sharp repring of G10 central banks as energy prices and inflation expectations surge. - BoE: most sensitive to shifting inflation dynamics --> largest repricing. - ECB: risk picture has shifted from cut to hike. - Riksbank: cutting bias has almost been deleted.

GS: Replacing the IEEPA Tariffs with a 15% Tariff under Section 122 for Now Would Reduce the Increase in the Effective Tariff Rate Since the Start of 2025 from Just Over 10pp to 9pp

How to lose the 21st century to China: 1. Unilaterally disarm regarding the soft power competition by ending economic aid and international media agencies. 2. Impose tariffs irrationally on everyone. 3. Invade Greenland, break up NATO, and isolate the US from the entire world. 4. Defund universities. 5. Discourage the best and brightest from immigrating to the US. 6. Withdraw from international organizations, handing over their control to the Chinese Communist Party. 7. Foment polarization between Americans. 8. Stop supporting democracy abroad; just talk about power. 9. Weaken American democratic institutions at home.

🇸🇪🚀The SEK is on track for its strongest annual run ever against the dollar. To surpass the previous record set in 2003, USDSEK only needs to drop to 9.15 from the current 9.18.

I got animated. (For a reason.)

@LindenJohan @Jonathanviktor1 @wiker_elin Poängen är att om man vill ha en signal ”vart det barkar” kan man inte titta på USA-räntor längre, som har varit den viktigaste drivkraften de senaste åren. Hör gärna av dig om du lyckas bygga en modell som kan prediktera valutarörelser med konstant förklaringsgrad över tid.

Om man hänvisar till nya parametrar som styr när inte den tidigare visar samband så är det svårt att bevisa att nån parameter skapar kausalitet, dvs är drivande, och det kan lika gärna vara brus allihop. Poängen med att du eller nån tar upp diagram är ju för att man vill ha en framtida signal vart det barkar.

😶‍🌫️

@Jonathanviktor1 @LindenJohan @wiker_elin Valutor och inte minst kronan tenderar att drivas av olika faktorer över tid. På senare tid har det uppenbarligen varit ränteskillnaden. Det är hela syftet med att "cherry picka" tidsintervallet. Grafen nedan visar rullande korrelation över det senaste året. 0,85.

@GustavHelgesson @LindenJohan @wiker_elin Och det som ifrågasätts är om det här sambandet setts på längre (3,5, 10 år) och/eller andra tidsserier (2010,2017) eller endast i det intervallet som valdes för screenshot, dvs att det cherry pickades för att förstärka den tes man ville.

@Jonathanviktor1 @LindenJohan @wiker_elin Poängen med grafen är att USDSEK har haft ett nära samband med ränteskillnaden (i synnerhet amerikanska räntor) de senaste åren men att korrelationen har brutits.

@GustavHelgesson @LindenJohan @wiker_elin Visst kan det vara det om det i alla andra tidsserier inte visar korrelation, utan mönstret endast syns under 2024?

@LindenJohan @wiker_elin Är stark korrelation mellan två finansiella varibler i över ett år cherry picking, menar du?

@GustavHelgesson @wiker_elin Är det ett cherry-pickat startdatum? Brukar lustigt nog vara det i såna här korrelationsdiagram.

Paradigm shift

@Frag0L oops, typo. March 2009, not 2019 :)

@GustavHelgesson Does it not look like it happened somewhere in 2008-09 on the chart as well?

The SEK just had its third strongest week against USD since at least 1970. Statistically, this is a once-in-a-generation event. Compared to the peak in January, USDSEK has declined by 115 figures (öre) to 10.10 this morning.

@Frag0L March 2019 - post GFC July 2023 - US downside CPI surprise

@GustavHelgesson When were the last 3-5 times something similar happened?