Trade Ideas Survey: August Lull in Full Swing – Post-CPI Market Reaction Watched Closely

Responses were collected on 4 August.

Macro Hive Network

• It was a quiet week for markets, defined by an undershoot in US CPI, which Dominique and Henry believe the market is making too much of. Post-CPI, there is some feeling across our network that the risk-asset rally may fade. The price action in the near-term will consequently be watched closely for how long the rally can be sustained.
• Participant 13 agrees with our view on the market under-pricing the Fed’s terminal rate. Following the CPI release and after comments from the Fed’s Evans they paid 1Y1Y US OIS and entered into a December 2022/March 2023 Eurodollar steepener. Elsewhere, Participant 2 entered a small position in the US long-end via TLT.
• Meanwhile there were several exits. Participant 4 flattened their book, closing short positions in Tesla and gold, and a long position in USD/CNH, while Participant 9 closed their long NVAX position.

Bilal’s Trades and Views

After re-entering positions recently, I am continuing to asses re-entering trade ideas. For now, I am concentrated in EM (long USD/INR; pay 2Y INR and THB; and 1s5s MYR flattener).

Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)