Thread by @Trinhnomics

Good morning! It's the second week of January & don't you feel rather aged already w/ the drama so far? Beyond politics (and geopolitics) or shall I say BECAUSE OF politics, asset prices have moved quite a lot & the one that matters above all else is UST yield that reached 1.11%

Here are the expectations of China CPI coming out: yes, that's a zero and PPI still deflated. With the PMIs expansion softer, the question is can China rates remain so high?

And similarly, the NFP number shows weak job growth into December so the question too is whether the US absorb higher rates (longer end) & how high can the longer end steepen while the Fed keeps the short end low. Will the Fed make sure the long end doesn't rise too much as well?

China CPI was 0.2%YoY in December so still weak but no longer deflated & PPI less deflated. Core inflation (stripping out food & energy) eased to 0.4%YoY from 0.5%.

Overall, the most positive is the PPI less deflated but CPI is nothing to brag home about.

Details of PPI show less deflation of raw materials or sequential (mom-on-month growth of PPI).

Details of CPI %YoY & you can see that a lot of the increase of the CPI is due to food while core slower. Seems like essentials are still rather solid w/ food & tobacco + medical care & education punching positive while clothing & housing still meh.

With the price of PPI less deflated on raw materials, let's look at commodity. This is Bloomberg Commodity Index & it has bounced!

Let me show u this in a diff way: here is commodity prices from 1 December 2020 to now. Look at that! They are of course going up as equities have gone up & also yields etc.

These are asset movements pricing in an economic recovery for 2021. Commodity markets are pretty ahead.

You can also see the increase of commodity prices not just in China PPI but also US ISM manufacturing in December where commodity prices pushed up prices.

And let's look at where we are on vaccination globally:

The US has done 36% of available vaccines or 2.44% of total population. Best is Israel w/ 20% & then the UAE & Bahrain.

UK is at 3% of total population. Danes are catching up at 2%. Overall, progress is slow in Europe.