FX & Global Macro Strategist by day | 90s R&B & Hip-Hop DJ by night | Views here are my own | @VandaResearch
London, England
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⚠️ Markets are pricing in the most aggressive front-loaded Fed hiking cycle in modern history. If the Fed delivers 4 consecutive 50bps hikes starting in May... which is starting to get priced in... then this will be more aggressive than what we saw in '94. History being made $USD
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⚠️ Move in US yields looks alarming but within the norm for moves around Fed hiking cycles. Some signs we're more in a '22-23 supply shock regime. Bond routs here typically run until there's a clear exogenous circuit breaker or consensus says 'that's enough'. Not there yet $USD
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⚠️ Fed hikes 25bps. Time to re-up a chart from '22... markets pricing one of the most shallow Fed hiking episodes in last 30Y. Thinking more akin to a 'mid cycle adjustment'. But those have been historically rare (4 out 6 cycles ended up more hawkish than current sentiment) $USD
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Viraj Patel retweeted
US equity positioning has moved sideways lately.
In our latest Positioning Update, @VPatelFX lifts the lid on what's holding back the next move.
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“Military Intervention” at the long end of the yield curve
$USD
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⚠️ UK single month unemployment jumped to highest since Oct 2020. While it may get revised, UER trend now turning for the worse. Following stagnant job listings & higher layoffs in high-freq data. Private pay growth sub-3% for 3M in a row says there’s no need for BoE hikes $GBP
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⚠️ Looks like a pretty well-behaved US CPI report in line with historical norms since 2000. If anything, breadth (48% of basket >2.5% annualised infl) + NSA core CPI MoM below median readings for July. Hard to argue for a hike on another soft-ish inflation print (+ soft NFP) $USD
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Looking forward to when Amazon buys Liverpool and Bezos looks to return new signings for free within 30 days 🤓
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⚠️ Markets aren’t eating TACOs any more. Warsh/Fed might have something to do with that $USD
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Updated FX Factor Model:
• carry
• valuation
• momentum
• growth
• is_friend_of_trump
🤓 $USD
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⚠️3 FOMC officials just voted for a hike. First unified hawkish bloc of 3 since Sep 2016... only the 3rd time since 1980. When 2+ hawks dissent at a hold, the Fed hikes within 2 meetings 57% of the time. 2.6x more likely than no dissent. History says a Sep rate hike is live $USD
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Warsh sounds like a Fed Chair wanting to play 3-5-2 with a team only capable of playing 4-3-3 🤓
$USD
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Technically the floor on Sep hike odds is 25% (assuming no material new information) $USD
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⚠️ Shaping up to be one of the more eventful FOMC meetings in history. 3rd biggest increase in positions across front-end Fed Futures ahead of an FOMC since 2000 (3rd biggest as a % of OI since 2020). Not quite Sep-24 and the 25 vs. 50 cut debate. Expect big moves either way $USD
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Biggest pushback to this is that “It’s coming” (delayed / lagged impact). This is what MPC hawks will argue. But we’ve had a couple of months of data now and similar to football… not convinced “Inflation Is Coming Home” [for now… on both fronts 😉] $GBP
⚠️ Few signs in today's UK CPI report that the oil shock is leading to 2nd round inflation (unlike '21/22). Subdued breadth with 38% of the basket running above 2.5% annualised inflation (vs. 12M avg at 44%) & broadening signs of price cuts (<0% MoM). Not rate hike worthy $GBP
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⚠️ Few signs in today's UK CPI report that the oil shock is leading to 2nd round inflation (unlike '21/22). Subdued breadth with 38% of the basket running above 2.5% annualised inflation (vs. 12M avg at 44%) & broadening signs of price cuts (<0% MoM). Not rate hike worthy $GBP
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⚠️ Waller put a lot of emphasis on inflation breadth. June CPI was undoubtedly soft from a breadth perspective - only 43% of the basket running above 2.5% annualised inflation (lowest since Feb '25). 47% of the basket saw -ve %MoM prices... the most since Aug 2024. Doves win $USD
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⚠️ Reminder that the macro consensus at the start of the year rarely plays out. Consensus at the start of 2026 was for long RoW cyclicality and a dovish Fed (underweight trades linked to Tighter FCIs). Both have materially unwound, with markets now looking for tighter FCIs $USD
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