All Macro-Thematic Trend Reports:

CPI rule changes raise the odds of a “soft landing” in our view (for a few months at least) (FFTT, 1/17/23)

In August 2021, the BLS announced interventions were considered to mitigate possible measurement errors caused by the COVID-19 pandemic during 2020, but the standard biennial update procedure was ultimately chosen.-US BLS, 2/25/22 (when US policymakers still believed “Inflation is transitory”) Starting with January 2023 data, the BLS plans to update weights annually for the Consumer Price Index based on a single calendar year of data, using consumer expenditure data from 2021. This reflects a change from prior

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The 10 Most Interesting Things We’ve Read Recently (FFTT, 1/13/23)

Thoughts on annual inflation slowing to 6.5% in December (Page 2) US government CPI calculation methodology change beginning in Feb-23 could mechanically drop reported CPI by 200-300 bps by end of 2q23. (Page 3) WSJ Fed reporter Nick Timiraos: “Inflation report tees up likely quarter point Fed rate hike in February.” (Page 6) “Bonds are back!  30y USTs draw 3.58% v. 3.609% pre-sale when-issued yield.” (Page 7) “The Bank of Japan can save their bonds

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FFTT thoughts on Zoltan Pozsar’s “War and Commodity Encumbrance” report (FFTT, 1/11/23)

Commodities have already been en­cumbered for 10 to 15 years and the West doesn’t realize it yet, and that’s going to be I think one of the big surprises in ‘23, ‘24, and ’25…[China’s] already encumbered a lot of the commodities…if you look at the world’s top 15 oil net exporters in 2012… China had already struck development deals, investments, swap lines, outright yuan pricing [by 2016 or 2018.]  In a few cases like Nigeria,

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The 10 Most Interesting Things We’ve Read Recently (FFTT, 1/6/23)

“Era of Negative-Yielding Debt is Over” (Page 2) “The Fed’s balance sheet was reduced by 2.4% in 2022” … “2022 was the worst year for stocks and bonds since 1871.” (Page 4) “Japan’s largest insurer may shift its portfolio in favor of domestic bonds after BOJ lifts yields” (Page 7) “Oh. My. God.  BOJ lifted the ceiling for 10y JGB yield & had to buy 16.2 trillion Yen in JGB’s to defend the new cap.”

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“Soft landing” is likely to become a casualty of reality and math in 1H23 (FFTT, 1/4/23)

The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28 [2008.]  The committee maintains a chronology of the beginning and ending dates (months and quarters) of US recessions. The committee determined that a peak in economic activity occurred in the US economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession.“NBER Business Cycle Dating

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