Markets Weekly July 27, 2024

Hello my friends, today is July 27th and this is Markets Weekly. So this past week, what a roller coaster markets, we got some sizable down days and some updates as well, a lot of volatility. What really caught my eye was the tremendous appreciation in the Japanese yen. If you look back, you'll see that over the past couple of weeks, it appreciated from about 161, 2 as low as 152 on the USD JPY cross. So my best guess is that there was some serious delivering happening and that's what I'll write about in my note this week. Now is this the end or is this a correction? I have no idea. Personally I bought the dip and so we'll see how that turns out in the coming weeks.

你好，朋友们，今天是7月27日，欢迎收看《市场周报》。过去的一周真是跌宕起伏，市场经历了一些大跌日和大涨日，波动非常大。让我特别注意到的是日元的显著升值。如果回顾一下，过去几周，日元从大约161升值到最低152，对应美元/日元的汇率。所以我的猜测是，有一些重要的交割在进行，我会在本周的笔记中写到这个问题。那么这是趋势的终点还是只是一次调整呢？我也不知道。个人来说，我在市场下跌时买入了，所以我们将拭目以待，看看接下来的几周会如何发展。

But today I want to talk about three things. First, let's talk about the really good soft landing data we got in the US the past week. And secondly, let's talk about an acceleration in the global rate cutting cycle where a bank of Canada cut for the second time the past week. And lastly, Stephen Moran and Norel Rubini came out with some interesting work that details how the Treasury has been boosting the markets and to what extent. So let's talk a little bit about their findings. Okay, starting out with soft landing. So this past week, we got two really important data set data prints. One of course, GDP for the second quarter and the other, the PCE inflation, which is the Fed's favorite measure of inflation. Now GDP came out and it was great. 2.8% annual rates.

但今天我想谈三件事情。首先，让我们讨论一下过去一周美国发布的非常好的“软着陆”数据。其次，我们谈谈全球降息周期的加速，加拿大银行在过去一周内进行了第二次降息。最后，Stephen Moran和Norel Rubini发布了一些有趣的研究，详细说明了美国财政部是如何推动市场的，以及到什么程度。所以，让我们稍微讨论一下他们的发现。 首先，讲一下软着陆。上周，我们得到了两组非常重要的数据。一组是第二季度的GDP数据，另一组是美联储最喜欢的一项通胀指标——个人消费支出(PCE)通胀率。GDP数据非常好，年增长率达到了2.8%。

Now recall on the first quarter, we got kind of a softest GDP print and many people were thinking that, you know, we're falling into recession and so forth. But this 2.8% totally blows out of the water. I think economists tend to think that the underlying potential growth rate of the US is about 2%. It's really hard to say now since we've had so much migration and when you add more people, the potential growth rate for the economy increases in the short term. So but it in any case, 2.8% definitely, definitely suggest that US economy continues to do well. There is no immediate sign of recession.

回想一下第一季度，我们得到了一个相对较低的GDP数据，很多人认为我们可能会陷入衰退等等。但是2.8%的增长率完全出乎意料。我认为经济学家们通常认为美国的潜在增长率大约是2%。现在很难说，因为我们经历了大量的移民，当增加更多人口时，经济的潜在增长率在短期内会上升。所以，无论如何，2.8%的增长率无疑表明美国经济表现良好，没有立即陷入衰退的迹象。

Now one of the things that the professional forecasters look at when they look at these GDP data is the private final sales domestic consumers because they think that is a more accurate measure of underlying demand, kind of like looking at core CPI instead of CPI. Now the last time around when we had a weak headline, a GDP print, they were suggesting that the underlying private sell, private final sales to domestic consumers, what was pretty good so that headline print was misleading and they were right.

现在，专业预测者在查看这些GDP数据时，会关注私人最终销售给国内消费者的情况，因为他们认为这是更准确的需求衡量标准，就像看核心CPI而不是整体CPI。上次当我们看到GDP数据总体偏弱时，他们指出私人最终销售给国内消费者的数据还不错，所以总体数据有些误导，而且他们的判断是正确的。

Now this time around when you look at the same number, it's still suggesting very strong underlying private final demand at 2.6%. Now that suggests that going forward, the GDP is probably going to be fine looking at the Atlanta Fed. Now GDP casting, again, we only have a few weeks of data. It's also suggesting that so far based on everything that we see, GDP continues to be above trend. So things are going well when it comes to growth on the soft landing part. Now what about the other part? Inflation. And that's been the Fed's focus for the past few years, much less so today as inflation has come down.

现在，当你再次观察相同的数据时，它仍然表明，私人最终需求的基础非常强劲，达到了2.6%。这意味着未来的国内生产总值（GDP）可能会不错，根据亚特兰大联储的数据预测来看。尽管我们目前只有几周的数据，但这些数据也表明，到目前为止，GDP继续高于趋势线。因此，关于平稳着陆的经济增长情况良好。那么，另一部分呢？通货膨胀。这几年来一直是美联储的关注重点，但随着通胀下降，现在关注得少了很多。

Well PCE, the Fed's favorite inflation measure, are printed at 2.6% year over year. Again that is above the 2% target but if you look at the trend over the past few months, or past few quarters, inflation is definitely moderating towards the Fed's target. Now on a month over month basis, core PCE printed at 0.2%. Now look at this data series over the past few months. You'll notice that so we had of course the inflation surprise at first quarter, we're on the month over month basis, core PCE spiked and kind of freaked everyone out. But since then it's been definitely moderating, suggesting that that spike up in the first quarter could have been a blip.

好的，个人消费支出（PCE）（美联储青睐的通胀指标）同比增长2.6%。虽然这仍然高于2%的目标，但如果你看过去几个月或者几季度的趋势，通胀确实在朝着美联储的目标缓和。现在，按月计算，核心PCE增长了0.2%。如果你看看过去几个月的数据系列，会注意到在第一季度的时候，通胀突然上涨，核心PCE飙升，吓到了大家。但从那以后，通胀确实在缓和，这表明第一季度的上涨可能只是一个暂时的现象。

So looking at this core PCE measure, I think that the Fed is going to take a lot of comfort in it and indeed the market right now is pricing in about three cuts this year. And as we have a Fed meeting this week, I think the expectation is widely that the Fed is going to try to guide the market towards a September cut. So when you're thinking about Southland and again growth is strong, inflation coming down, things are looking pretty good so far. But that's not the case in all other countries and so that takes us to our next topic, what's happening in Canada.

所以，看一下这个核心PCE指标，我认为美联储会从中得到很大安慰。目前市场预计今年大约会有三次降息。而随着本周美联储会议的到来，人们普遍预计美联储会引导市场朝着九月降息的方向发展。因此，当你考虑南方地区时，增长强劲，通胀下降，一切看起来都很顺利。但其他国家情况并非如此，这就引出了我们的下一个话题，加拿大的情况如何。

So as you recall this month, the Swiss National Bank kicked off the global rate cutting cycle by cutting rates. They have since cut again the ECB joined in cut rates as well with the market thinking that they're going to do so again this year. And Bank of Canada also cut rates earlier in the year and again for the second time this past week with Governor Tifmaklim thinking that they're going to do it again. So what is driving this second rate cut in anticipated series of rate cuts in Canada? So let's look at the data first. So according to the bank's latest monetary policy report, you can see that inflation really has been coming down towards their target towards target range very well. It's been gliding towards what they want so I can understand from their perspective there's really no need for policy to be as restrictive as it has been. But more importantly though, there are worrying signs that growth is slipping away. Now when you look at their aggregate numbers, GDP growth is about 1.5%.

好的，以下是这段话的中文翻译，尽量简洁易懂： 正如你记得的，本月瑞士国家银行率先开始了全球降息周期，它们已经连续两次降息，欧洲央行也加入了降息的行列，市场认为它们今年还会再次降息。加拿大央行在今年早些时候降息，本周又降了第二次，行长麦克林预计它们还会再次降息。那么，是什么驱动了加拿大这次及预期中的一系列降息呢？首先，我们来看一下数据。根据央行最新的货币政策报告，可以看到通胀率确实在逐步下降，趋近它们的目标范围。从它们的角度来看，政策不需要像之前那样严格。但是，更重要的是有迹象表明增长正在放缓。现在查看它们的总体数字，GDP增长率大约是1.5%。

So it's positive, it's not a recession but that really hides some important per capita numbers. So one way you can grow your GDP which is really just the amount of goods and services produced in the economy is simply by adding more people, more people even if they're not doing super important things. Now they're producing stuff and so you produce more goods and services. Now Canada increases its population by 3% in a year and it's growing at 1.5%. So on a per capita basis, it's actually shrinking 1.5%. So even though they are not technically in a recession, the average citizen is definitely in a recession because their living standards are declining. Now an interesting chart they show is that per capita GDP has actually been declining for four quarters.

所以这是个积极的消息，并不是衰退，但这实际上掩盖了一些重要的人均数据。增加国内生产总值（GDP）的一种方式，就是简单地增加人口，即使这些新增人口并没有从事特别重要的工作。现在他们在生产商品和服务，所以总产出增加了。比如说加拿大在一年内人口增加了3%，而经济增长率为1.5%。那么人均GDP实际上是下降了1.5%。所以尽管技术上没有进入衰退，但普通市民确实感觉像是在衰退，因为他们的生活水平在下降。有一个有趣的图表显示，人均GDP实际上已经连续四个季度在下降。

So it's I think putting a lot of pressure on households. Now one thing you know that's really interesting about Canada is that their interest rates. So again, the way that monetary policy works of course is through interest rates. For a lot of the people there, if you have a mortgage, you have to renew it say once every five years. So in a sense, you're someone on a floating rate standard. So as we've been in this rate hike cycle for a few years, more and more people who took really low rate mortgages a few years ago are now having to renew their mortgages at much higher rates and that is pinching their wallets and reducing their ability to spend money on other things.

所以我认为这给家庭带来了很大的压力。有一点关于加拿大特别有意思的是他们的利率。所以，再次说明，货币政策的运作方式当然是通过利率调整。对于很多在加拿大的人来说，如果你有房贷，你需要每五年左右续约一次。从某种意义上说，你是处于浮动利率标准上。所以随着我们进入这个加息周期已有几年，越来越多几年前获得低利率房贷的人，现在不得不以高得多的利率续约他们的房贷，这在压缩他们的钱包，减少他们在其他方面花钱的能力。

So again, there seems to be heading towards a recession and so that is causing bank of Canada I think to be a bit more cautious on growth. So with inflation really close to their target and growth slowing, obviously they're going to be projecting a easier monetary policy. Now looking at the labor market and you add a whole bunch of people in even as your demand is slowing, that is foreshadowing a pretty weak labor market so far has been fine. But Bank of Canada has this really interesting statistic showing that the percentage of unemployed people each month that are able to find a job is declining really rapidly and it's approaching pretty low percentages if you look at this time series.

所以，再次看来，经济正在走向衰退，这使得加拿大央行在经济增长方面变得更加谨慎。由于通胀接近他们的目标且经济增长放缓，显然他们将会预计采取更宽松的货币政策。现在看劳动力市场，尽管需求在减少，但劳动力却在增加，这预示着劳动力市场相当疲弱。尽管目前状况尚可，但加拿大央行有一个非常有趣的统计数据显示，每月能够找到工作的失业人数比例正在迅速下降，如果查看这段时间的数据，该比例已经接近较低水平。

So again, they seem to be very worried that the economy is heading towards the wrong direction. So what does that mean for their markets? Now I think the biggest impact is probably going to be in their currency. Now Governor Tiff Maclem and Sherpaal had a conference in Washington a few months ago and someone asked Governor Maclem, you just do whatever the Fed does, right? Do you guys just copy the Fed? And Governor Maclem was very clear that no, they do their own monetary policy and they have an escape valve which is the currency. So when they have different economic conditions, so things slowing Canada but are fine in the US, they can cut rates and that will be buffered by changes in their currency which will continue to act as a source of easing, making their exports more competitive.

所以，他们似乎非常担心经济正在朝错误的方向发展。那么，这对他们的市场意味着什么呢？我认为，最大的影响可能会体现在他们的货币上。几个月前，行长蒂夫·麦克勒姆和夏尔帕尔在华盛顿召开了一次会议，有人问麦克勒姆行长，你们只是照搬美联储的做法，对吧？你们只是在复制美联储吗？麦克勒姆行长非常明确地表示，不，他们有自己的货币政策，他们还有一个“逃生阀”——货币。因此，当他们遇到不同的经济状况时，比如加拿大经济减速而美国经济良好，他们可以降息，而货币的变化将缓冲这一影响，使他们的出口更具竞争力，从而继续作为一个放松的源头。

And if you look at CADUSD, you'll notice that it's been surging so the Canadian currency has been depreciating over the past few days. Now it seems like there seems to be some kind of soft ceiling about 1.39. I don't know if we're going to punch through. We've definitely been hanging around that level for the past few quarters but if the Canadian rate cutting cycle proceeds, whereas the US economy continues to do well, you can easily imagine that the Canadian dollar depreciate further against the USD. So we'll see how that goes.

如果你看看CADUSD（加元兑美元汇率），你会注意到它一直在上涨，这表明加拿大货币在过去几天内一直在贬值。现在看来，在1.39左右似乎有一个软上限。我不确定我们是否能突破这个水平。过去几个季度我们确实一直徘徊在这个水平附近。但是，如果加拿大继续降息，而美国经济表现良好，你可以轻松地想象到加元会进一步贬值兑美元。所以我们拭目以待。

Okay, now the last thing I want to talk about is this really interesting paper by Stephen Moran who used to work at the US Treasury, also a great follow on Twitter and Nouriel Rubini, also known as Dr. Doom, a famed forecasting of the subprime crisis in 2008 during the Great Financial Crisis. So what they're writing about here is something we've talked about over the past year and many people have also noted that when the Treasury seems to be doing something with their issuance that is in a sense easing financial conditions. Now in their paper they provide a very clear description of how this works and also they have an estimate as to how much they think this is impacting the markets. So at a high level, now when the Fed is doing QE, what they're doing, well they're doing a couple things. One of course is that they're buying a whole lot of longer-dated Treasury securities and by decreasing the supply of Treasury securities in the market, no basic supply and demand, if you decrease the supply of something, the price of something rises and so in bond terms that means it puts downward pressure on interest rates and the Fed is totally open, that's what they expect to do, right? Doing QE, buying longer-dated bonds, fewer longer-dated bonds available for private sector investors and so that puts down more pressure on interest rates. The second thing the Fed does is that the way that it purchases this is basically prints a whole bunch of money and so during times of QE the money supply increases and if you are a monetarist you would think that has something to do with economic activity. To be clear, that perspective has been very wrong for decades and decades. But in any case these are the two common channels people think of when they think of QE, supply of duration and money supply.

好的，现在我想谈谈的是一篇非常有趣的论文，作者是Stephen Moran，他曾在美国财政部工作，也是Twitter上的大V，还有著名的经济学家Nouriel Rubini，绰号“末日博士”，因预测2008年金融危机中的次贷危机而闻名。他们在这篇论文中讨论的话题是我们在过去一年中多次提到的，许多人也注意到，当财政部在操作国债发行时，从某种意义上来说是在放松金融环境。在他们的论文中，他们详细解释了这个过程，并估算了它对市场的影响程度。 简单来说，当美联储进行量化宽松（QE）时，他们主要做两件事。首先，他们会购买大量的长期国债。根据供需原理，若市场上的国债供应减少，其价格就会上升，这意味着利率会降低。美联储完全公开表示，他们希望通过这种方式压低利率。其次，美联储在购买这些国债时，会印刷大量货币，所以在进行QE期间，货币供应量会增加。如果你是货币主义者，你会认为这对经济活动有影响。要明确的是，这种观点多年来一直被证明是错误的。但无论如何，这就是人们通常想到的QE的两条常见渠道：国债供应的影响和货币供应的变化。

Now this a new paper suggests that when the US Treasury is changing the composition of its debt issuance, issuing more Treasury bills, fewer coupons, that has a very similar impact. So this is how they think of it. So if you say you have to issue a trillion dollars in debt, while the US Treasury by simply issuing let's say a higher fraction of that in short-dated bills rather than coupons, you are also decreasing the amount of coupons, the amount of long-dated bonds that the private investors have to digest. Mechanically that's very similar to QE, fewer supply of duration, downward pressure on interest rates. So that's pretty clear as well.

一篇新文章表明，当美国财政部改变债务发行的构成时，比如增加国库券发行，减少长期债券的发行，这会产生非常相似的影响。他们是这样理解的：假设需要发行一万亿美元的债务，美国财政部只需在其中增加短期国库券的比例，减少长期债券的发行，就会减少私人投资者需要消化的长期债券数量。从机械上讲，这类似于量化宽松政策，减少了长期债券的供应，对利率产生下行压力。这样解释也很清楚。

The other point that they make is that Treasury bills, that's basically kind of like money. So if you think about it, a Treasury bill is just an IOU from the United States government, kind of like a dollar bill that pays interest. Now this analogy is especially apt because Treasury bills have very few interest rate risk and also they are very liquid. So just like the Fed is printing a whole bunch of money to buy coupon Treasuries, when you're issuing more bills, you are mechanically in a sense increasing the money supply. Again, it's not technically money in the sense that you can't use it to go and buy stuff at their denny's, but it's money like. And so when the Treasury is doing this, they are basically doing a form of QE in effect.

他们的另一个观点是，国库券基本上就像是钱。所以如果你这样想，国库券其实就是美国政府的一种借条，有点像支付利息的美元。这种类比特别恰当，因为国库券基本没有利率风险，而且非常流动。就像美联储印了大量的钱来购买附息国债一样，当你发行更多的国库券时，从某种意义上来说，你也是在增加货币供应量。再次强调，它技术上来说并不是货币，因为你不能拿它去餐馆消费，但它有类似于货币的性质。所以，当财政部这么做的时候，他们实际上在进行一种变相的量化宽松。

So looking at what the Treasury has done over the past few quarters, you note that the Treasury guides having about 15 to 20% of its issuance in bills over the past few quarters, it's gradually increased its share of bills so that it sits comfortably above 20%. Now their paper looks not just at the overall outstanding bills as a share of overall outstanding, but also looks at the flow of issuance over the past few quarters and notes that the issuance over the past few quarters has been highly disproportionate in the Treasury bills, suggesting that the Treasury has been having an impact on financial conditions.

看看财政部过去几个季度的行动，你会注意到财政部在过去几个季度中将大约15%到20%的发行集中在短期国债上，但逐渐增加了短期国债的比例，现在这个比例已经稳稳地超过了20%。现在他们的报告不仅关注整体未偿还短期国债在总体未偿还债务中的份额，还审视了过去几个季度的发行量变化，并注意到过去几个季度短期国债的发行量极不成比例，这表明财政部对金融条件产生了一定的影响。

Now the way that you estimate just how much of an impact though, again, this is going to the realm of econometric models, which for reference only, but looking at different ways that you can estimate this, they come up with an estimate, let's say about 25 basis points on the tenure. So they're thinking that what the Treasury did, increasing the share of bill issuance has lowered the tenure yield by about 25 basis points and they equate that to about 100 basis points worth of cuts by the Fed. Now again, this is all for reference only, but the overall idea has been that, yeah, the Treasury is doing this and they are in fact easing financial conditions and this in part explains why despite high interest rates, the economy continues to be strong and financial assets have gone through the roof.

现在，让我们估算一下这种影响的程度。再次强调，这涉及到经济计量模型，仅供参考。通过不同的方法进行估算，他们得出的结论是，大约对十年期国债收益率影响25个基点。他们认为，财政部增加短期国债发行的做法，使得十年期国债的收益率降低了约25个基点，相当于美联储降息约100个基点。需要再次强调的是，这些数据仅供参考，但总体的观点是，财政部的这些措施确实在缓解金融条件，这部分解释了为什么尽管利率很高，经济依然强劲，金融资产价格也大幅上涨。

Again we've talked about this I think a couple weeks ago when say Treasury official Josh Frost gave a speech explaining why he's doing responding to pushback that he's been getting that he's a goose in the markets. So the Treasury is responding, the Treasury is thinking that yeah, we're not doing that much. So, you know, we're just doing something routine and Treasury Secretary Yellen actually explicitly responded to this paper in commentary saying that it's not our intention to use financial conditions. And I don't know if that's true or not, but I think I agree with this paper that it's definitely having an impact on markets if at the very least psychologically because there are certain market participants who believe it's easing financial conditions.

我们确实已经谈过这个问题，我记得是几周前，当时财政部官员乔什·弗罗斯特发表演讲，解释他为什么要做出这个回应，因为他在市场上受到了很多批评。财政部正在回应这些批评，他们认为，他们并没有做太多，只是做一些例行的工作。财政部长耶伦也明确回应了这篇评论，表示他们并没有打算通过金融条件来影响市场。我不确定这是否属实，但我同意这篇文章的观点，即至少在心理上，这确实对市场产生了影响，因为有些市场参与者认为这是在放松金融条件。

Now one other really important thing about this market is the potential future unwind. Oh, just to the side. So in addition, their estimate of the size of this issuance is about $800 billion in missing coupons. That is to say that if Treasury were faithful to its 15 to 20% share of bills, they would have been increasing coupon sizes. But and if they did that, they would have been issuing $800 billion more coupons. So again, that's a that's a big number. What they're worried about though is that in the future, obviously you can't, well, you shouldn't continue to be increasing bills as a share a total debt. One day, if we have a new Treasury Secretary or things change, what is going to happen when that new Treasury Secretary needs to unwind this and get a bill share back down to about 15 to 20%.

现在，关于这个市场的另一个非常重要的事情是未来可能的调整。哦，稍微偏离话题一点。除此之外，他们估计这次发行的规模大约有8000亿美元的缺失债券收益。也就是说，如果财政部忠实于15%到20%的短期国债比例，他们本应增加债券的发行量。如果他们那样做了，就会发行更多价值8000亿美元的债券。所以，这确实是个很大的数字。然而，他们担心的是，在未来，显然不能或不应继续增加短期国债在总债务中的比例。有一天，如果我们有了新的财政部长或情况发生变化，当新的财政部长需要将短期国债比例降回到15%到20%左右时会发生什么呢？

Now they're thinking that when that happens, you could have a sizable increase in long related yields, maybe 30 basis points. And that could be very, I think that would tighten financial conditions going forward if we have maybe next year or maybe in a future administration when they finally want to wind down what the just this administration has done. So that seems to be again, keep in mind that Dr. Doom is well known for having concerns. So for I know this could continue indefinitely.

现在他们认为，如果那样的情况发生，长期债券收益率可能会大幅上升，或许增加30个基点。我认为这会使未来的金融状况变得更加紧张，无论是明年还是未来的政府在最终想要结束现政府的政策时。因此，这种情况似乎再次发生。请记住，“厄运博士”以其担忧著称。所以我认为，这种情况可能会无限期地持续下去。

I think if you look across the world, many, many countries have large share of floating as large share of short data debt as part of their, as part of their overall debt stack. But we'll see if they want to remain faithful to 15 and 20% definitely, definitely there could be some financial turmoil in that process.

我认为，如果你放眼全球，许多国家的债务结构中都有很大比例是浮动利率债务和短期债务。但如果它们想始终保持在15%到20%的比例，那么在这个过程中肯定可能会出现一些金融动荡。

Okay, so that's all I prepared for today. Thanks for tuning in. This week is an FOMC week and I will be back on Wednesday to give you my thoughts on the FOMC meeting. Again, if you're interested in hearing my thoughts, don't forget to check out my blog at FEGI.com and don't forget to subscribe and subscribe to this channel.

好的，这就是我今天准备的全部内容。感谢收看。本周是美联储公开市场委员会（FOMC）会议周，周三我会回来分享我对会议的看法。如果你感兴趣，记得查看我的博客FEGI.com，不要忘记订阅这个频道。

All right, talk to you guys soon.

好的，很快再跟你们聊。