08.08.2022
Macro in one chart
One of the problems trying to integrate macro into an equity manager’s investment process, is the subject itself. It can be tricky to follow & fit into one, easy story.
On the Qi portal the first chart you will see is the “Top 10 Macro Driver Shifts”. It shows the 10 biggest shifts in macro factors over the last week.
For time poor equity PMs it is an effective cheat sheet. Take today’s for example.
On the Qi portal the first chart you will see is the “Top 10 Macro Driver Shifts”. It shows the 10 biggest shifts in macro factors over the last week.
For time poor equity PMs it is an effective cheat sheet. Take today’s for example.
The biggest shift last week was a positive move in US GDP growth. In z-score terms, Friday’s Payrolls report pushed tracking US growth higher by over one standard deviation. The move wasn’t as big, but European & Chinese GDP also enjoyed a decent bounce.
The next biggest moves came from US & European yield curves. Both experienced a sharp flattening.
Qi uses the 5s30s curve shape as a proxy for forward growth expectations. Yield curves typically steepen in a reflationary environment, flatten as markets worry about futures levels of growth.
And there you have today’s basic macro story summed up. The US labour market remains hot. But that increases fears of more aggressive Fed rate hikes, & that is pushing the bond market to flatten (invert) the yield curve & price in a 2023 recession.
Macro box ticked; time to move on with your bottom up analysis of company fundamentals.
And as an aside, note an improvement in Italian Sovereign Confidence also features. Given Moody’s downgrade to Italy’s rating outlook late on Friday, recent complacency here could be threatened.
The next biggest moves came from US & European yield curves. Both experienced a sharp flattening.
Qi uses the 5s30s curve shape as a proxy for forward growth expectations. Yield curves typically steepen in a reflationary environment, flatten as markets worry about futures levels of growth.
And there you have today’s basic macro story summed up. The US labour market remains hot. But that increases fears of more aggressive Fed rate hikes, & that is pushing the bond market to flatten (invert) the yield curve & price in a 2023 recession.
Macro box ticked; time to move on with your bottom up analysis of company fundamentals.
And as an aside, note an improvement in Italian Sovereign Confidence also features. Given Moody’s downgrade to Italy’s rating outlook late on Friday, recent complacency here could be threatened.
