"Core" Concerns
Soft landing begins to turn into a ‘no landing’ scenario- Although the phrase 'one swallow doesn’t make a summer’ springs to mind (as well as the January Quirks in CPI being blamed by experts) the broad thinking is that Fed will have to stay higher for longer.
CPI reinforces Fed's concern that core services inflation will remain sticky because of tight labour market. Treasuries epitomised this, with rates selling-off across the curve.
Now, focus on tomorrow's PPI. PPI inflation has been falling sharply since peaking in Q1 2022 but some of the PPI data which feed into calculation for policy relevant PCE inflation remain too high.
Two way " Indian rope trick" is rumoured to have kept the oil prices going contained in the recent past -reports Biden administration spent one Trillion dollars buying & selling.
Presidential elections in Indonesia today - why being interested in it? Its debt was upgraded to investment grade in 2017- It is a hub for raw materials (50% of global nickel production, for example) -growth stable - lowest debt stock. Jokowi (in office since 2014) not running. Challenge for successor to continue economic success of recent years.
Macro case for lower EUR/USD based on the relative terms of trade, real rates, and relative unit labour costs. Slight uptick in the ZEW-Break of 1.0695 to bring 1.0480 into focus.
UK jobs & wages beat support sterling.
UK’s turn to release inflation- which always remains above US and EZ.GBP currently is the largest long in FX markets and that's why it's not cracking - big sell off due soon - Should break 1.2574 NY low & 1.2524 38.2% Oct/Dec rise towards 1.2200.
Nothing new as Kanda says recent yen moves are "rapid" and he is Closely watching FX moves with a high sense of urgency. USD/JPY surging to 2022/23's 151.94/92 -32-yr peaks.