Today is an extraordinary day for macro driven by the U.S. Payroll number that many thought could be weaker based on recent weather conditions.
Not only were they wrong but this data only turbo-charged moves in macro that was already telling a tell of generational moves that have been extending extreme levels in some of the biggest markets in the world (FX, Rates, Commodities).
Quick charts to highlight extreme moves across key macro – that is telling us there are also major reversals of these trends coming:
USD/EUR now near key 1.08 support we think we will hold short term; a break of this level will test all-time lows by early 2016 if Fed acts too soon. Pack your bags for the summer vacation in Provence now!
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Sooooooo many people have been wrong about this job recovery. Guess what you CAN NOT have this type of job growth without wage inflation!
Fed will have no choice now to move in June. Question is do they move sooner when warmer weather may in fact “tear to roof off the sucka”
After ECB announced their QE in January, pundits rushed to point out that the US yield curve would get pulled down to meet Europe. The argument was that US-Bund spreads were wide by historical standards and that they were especially wide when considering CB differentials. How wrong could you be. This is a HUGE pain trade.
…we are actually 50 bps wide from that point. SO many funds the opposite way on relative value.
US yields not only wider to Bunds but now have punched even higher into a new range. Let’s not forget that Oil prices are no longer pulling yields down but may also put upward pressure on things…OIL HAS BOTTOMED PEOPLE!
The Dollar is the dog or the tail that wags the dog. Not sure. The move in the last 10days rivals some of the most aggressive short term spikes of ALL TIME
…The DXY move certainly one of the strongest trend moves of all time. Now rivals the flight to quality stampede of the crisis. The DXY has moved 22.2% in 173 days
…And yet Commodities have not been taken to the woodshed… they are sideways during this last 10days of the record Dollar move.
We think this is telling for the next phase. Commodities don’t rally when they are cheap, they rally when there is growth.
For EM currencies, today may actually be a capitulation moment. I believe EM currencies stop falling when the Fed start tightening…
Stay tuned!