Thread by @MacroTechnicals

MT GLOBAL MARKETS Momentum Weekly recap wk21 as of 24May19 - PFLUGPOST thread 1/n

• RiskOFF
• stocks weaker
• Govt Bonds bid, Bull-flattening
• Credit spreads wider
• flash PMI: US 50.6 ! JP 49.6 EA 47.7 = JPM Global PMI exp < 50
• IFO weak
• PM May resigned

2/n Global Markets update wk21 YTD

3/n Global Markets update wk21 overview wk/mth/YTD/YoY

4/n Global Markets wk21 Momentum / Trends / Exhaustion

• stock indices with weak momentum seem to have rolled over trend
• 10Y govt bonds remain in strong trend
• Credit spreads rolled over (up)
• Energies/Ind. Metals rolled over
• #GlobalSlowDown continues

5/n Global FX Matrix update wk21

• best performer (hardly a surprise) over last month: JPYCNH, flight to safe haven and PBoC allows to weaken Yuan in tariff "negotiations. Next step reval, by how much ?

6/n Global 10Y govt bond heatmap wk21

• #GlobalSlowDown = Global CB dovish = Global rates down = Bonds soar

7/n update Global Govt Yields 2Y, 10Y, Curve, FX

• massive bull-flattening across the board in wk21

• besides some 10Y-CB inversions...
• CA 2s10s new52wk low 6bp
• EuroZone 2s10s (ex IT) new 52wk lows
• UK ditto

#GlobalSlowDown Bond Rally

8/n update US swap curves in late cycle fwd guidance

9/n US: FOMC after FED minutes, but more importantly after US M.PMI flash 50.6 !

• Dec meeting now 77% vs 23%

10/n FF impl rate cuts Dec19, Mar20, Jun20 after US M.PMI flash 50.6 (lowest since Aug2009)

11/n US 2Y , 5Y, 10Y after US M.PMI flash 50.6

12/n US FRAs... 3mths rates in 6M, 9M, 12M, 15M ...

• in the current environment this is not stocks bullish, but bond bullish IMHO

• recession gauge

13/n VIX gradually moving up, previous steep contango term structure keeps flattening, obviously, US M.PMI shocker won't help

14/n VIX update ...

• June/July is the timeline for a possible large move up until YE

15/n update RiskOnOff monitor

• rolled over and kept moving down

16/n flash M.PMI last week:

• US 50.6 (!) = lowest since Aug2009
• JP 49.6
• EZ 47.7 (DE 44.3)

no real surprise (for some), but this has consequences for the weighted Global M.PMI indices ...

17/n ...expected JPM Global PMI will break 50

• US has the largest weight
• besides, Global, DM, EM are all crowded just near 50

#GlobalSlowDown continues = more CB liquidity to "rescue"

18/n ...expected Global M.PMI vs ISM

• with US the heavyweight, pulling JPM Global PMI below 50...

• and MarkIt having a skew on new orders (compared to equal weight ISM)... a plunge here is written on every wall now

19/n ... and with flash M.PMI nearly testing 50, Risk gauges VIX and CDX etc will certainly keep moving = RiskOff

20/n ...what else in wk21 ? Germany IFO

• Current (lagging) dropped 3points vs forecast
• Climate 97.6
= both making new multi-year lows
• Expectations "stable" 95.3

• (have to change the display)

21/n oh, US stocks market breadth

... does this look like a dip now ?

22/n ...ES NQ YM had a tremendous FED 180-turn rebound since Dec2018... ran out of steam, rolled over with elevated IV ... rate cuts priced in due to high uncertainty, M.PMI just above 50 = RiskOff

23/n ...and... PM May ... resigned.

• long overdue
• 3 years total waste, nothing accomplished
• next PM will be pro-Brexit (she wasn't)
• still, timetable, deal ? = high uncertainty = flip coin ?
• GBPUSD had a technical weak momentum, oversold now and large gap to YldDiff

24/n ... talking about crowded spaces while taking risks...

... this Mount Everest queue is one of the saddest and silliest picture I have come across.

While I admire the effort, but literally standing in a mile-long queue to “conquer “ ???

25/end

that’s all folks, enjoy the rest of the Sunday. x

Thanks Lewis to win for legend Niki 🏎🏆

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