Last week’s data releases spurred quite a bit of macro re-thinking, with US data exceptionalism finally come back down to early in Q1 (GDP revised down, consumption lower), while global inflation momentum have started to surprise back to the upside with Eurozone HICP re-accelerating back to 2.9% YoY (vs 2.7% before).

The slowdown in US data is now too pervasive to be ignored, with Atlanta Fed’s GDP now falling to sub 2%, and real disposable income growth slowing to sub 1%. Furthermore, rising credit card delinquencies, rent costs, and weakening labour markets are all signaling a weaker US economy into the election, with the Fed hand-tied with still high inflation and only a handful of meetings left before November.

Macro assets have been rallying aggressively over the past few sessions, thanks to Friday’s sequential deceleration in PCE, a 10% sell off in oil futures, and prevailing hopes for a goldlock slowdown. This week will see the release of much heavier Tier 1 data, starting with Jolts (today), ADP & ISM Services (Wed), and NFP (Friday).

NFP will be the busiest event this week, though next Wednesday will see a massive double header with FOMC and CPI for the most anticipated day heading into the summer. Strap on tight!

On the election side, former President has (unexpectedly?) benefited immensely from his recent guilty court verdict, with his probability of winning the November election jumping to over 50% (vs Biden at 35%). It would appear that a considerable portion of the voting populace sees the current trials as a ‘witch-hunt’ on the former president, back-firing against hopes that Trump would suffer from the guilt convictions. Should the former President return to office again, the major impact would be on fixed income as it is widely expected that he would exert new political influence on the Federal Reserve with easy money policies, free spending fiscal policies with further tax cuts. It’s going to be an interesting Q4 for markets, to say the least.

In crypto, sentiment has been buoyed since Friday following the rebound in US equity prices and overall risk sentiment, with BTC challening 70k again and ETH around 3.8k. Trading conviction remains low with funding interests staying subdued, realized volatility compressing, and prices holding well between the recent ranges. We would expect this to continue until at least NFP on Friday, and the next bigger move to wait until post CPI/FED next Wednesday. Path of least resistance feels to be on the upside for now. Good luck.

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