Head of Research and Global Chief Strategist, Steno Research

Andreas Steno

Head of Research and Global Chief Strategist

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

Macroeconomics

<ul>
<li>The change to the YCC-policy in Japan caught a majority of investors off guard, but so did the subsequent flows and moves in Japanese markets.</li>
<li>We kept reiterating that JGB yield risks were to the upside, while the JPY could see downside, which is exactly what has happened.</li>
<li>In this piece, we will try to elaborate on why that is and why we see a slow grind to 1% in 10yr JGB yields alongside a move in USDJPY to +150 territory.</li>
</ul>


The change to the YCC-policy in Japan caught a majority of investors off guard, but so did the subsequent flows and moves in Japanese markets.
We kept reiterating that JGB yield risks were to the upside, while the JPY could see downside, which is exactly what has happened.
In this piece, we will try to elaborate on why that is and why we see a slow grind to 1% in 10yr JGB yields alongside a move in USDJPY to +150 territory.


Japan Watch: Flows in JPY and JGBs after the YCC decision

Cross Asset Strategy

<ul>
<li>Every month, we assess the risk/reward in asset allocation via our Macro Regime Indicator framework, where we use our asset allocation model to provide input for our thought process and positioning ahead of the new month’s trading.</li>
<li>In early July we wrote that: “We remain a bit split on whether we will see a pronounced change of the Macro Regime from “down, down, down” (in liquidity, inflation and growth) to Goldilocks without QE with inflation down, liquidity down and growth slightly up.</li>
<li>Our portfolio will hence combine the best of the two regimes for the month of July.</li>
</ul>


Every month, we assess the risk/reward in asset allocation via our Macro Regime Indicator framework, where we use our asset allocation model to provide input for our thought process and positioning ahead of the new month’s trading.
In early July we wrote that: “We remain a bit split on whether we will see a pronounced change of the Macro Regime from “down, down, down” (in liquidity, inflation and growth) to Goldilocks without QE with inflation down, liquidity down and growth slightly up.
Our portfolio will hence combine the best of the two regimes for the month of July.


Macro Regime Indicator: PMIs to drive price action together with headline inflation

Head of Research, Steno Research

Emil Moller

Head of Research

<ul>
<li>Many have profited from MXN carry in the first half of 2023.</li>
<li>But is there more left to squeeze out or is it running on fumes?</li>
<li>We give our take here and assess the structural patterns at play in Mexico in relation to recent performance and the geopolitical climate.</li>
</ul>


Many have profited from MXN carry in the first half of 2023.
But is there more left to squeeze out or is it running on fumes?
We give our take here and assess the structural patterns at play in Mexico in relation to recent performance and the geopolitical climate.


EM By EM #12 - Is the Surging Peso a Prelude for a Longer Mexico Bull Case?

Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>The Turkish lira has become the worst-performing currency this year as the central bank is holding the policy rate steady despite sharply accelerating inflation, leading to highly negative real rates.</li>
<li>The lira is effectively in a vicious cycle: weakening currency adds to inflationary pressures, which with the central bank on hold means real rates become more negative, hurting the currency.</li>
<li>High inflation is also weighing on the economic outlook, which combined with worsening current account and fiscal deficits and depleting international reserves, is adding to the depreciation pressure.</li>
</ul>


The Turkish lira has become the worst-performing currency this year as the central bank is holding the policy rate steady despite sharply accelerating inflation, leading to highly negative real rates.
The lira is effectively in a vicious cycle: weakening currency adds to inflationary pressures, which with the central bank on hold means real rates become more negative, hurting the currency.
High inflation is also weighing on the economic outlook, which combined with worsening current account and fiscal deficits and depleting international reserves, is adding to the depreciation pressure.


Turkish Lira Takes the Helm as the Worst-Performing EM Currency

<ul>
<li>The US dollar has strengthened this year in line with my expectation, but the surprise has been that EM currencies have performed well despite the dollar strengthening.</li>
<li>The solid EM FX performance is entirely due to Latin American currencies which have performed well due to their very high carry, attractive valuations, and positive political developments.</li>
<li>In the near term, I expect LatAm currencies to continue to perform well but the environment may change as the year progresses.</li>
</ul>


The US dollar has strengthened this year in line with my expectation, but the surprise has been that EM currencies have performed well despite the dollar strengthening.
The solid EM FX performance is entirely due to Latin American currencies which have performed well due to their very high carry, attractive valuations, and positive political developments.
In the near term, I expect LatAm currencies to continue to perform well but the environment may change as the year progresses.


Mexico

The Mexican peso is the official currency of Mexico. 

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MXN (USDMXN CURNCY)

Japan Watch: Flows in JPY and JGBs after the YCC decision

The change to the YCC-policy in Japan caught a majority of investors off guard, but so did the subsequent flows and moves in Japanese markets. We...

Steno Research

Macro Regime Indicator: PMIs to drive price action together with headline inflation

Every month, we assess the risk/reward in asset allocation via our Macro Regime Indicator framework, where we use our asset allocation model to...

Steno Research

EM By EM #12 - Is the Surging Peso a Prelude for a Longer Mexico Bull Case?

Many have profited from MXN carry in the first half of 2023. But is there more left to squeeze out or is it running on fumes? We give our take...

Steno Research

Turkish Lira Takes the Helm as the Worst-Performing EM Currency

The Turkish lira is effectively in a vicious cycle: weakening currency adds to inflationary pressures, which with the central bank on hold means...

Gautam Jain, PhD, CFA

Latin American Currencies on Top

The US dollar has strengthened this year in line with my expectation, but the surprise has been that EM currencies have performed well, led by...

Gautam Jain, PhD, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)