Macro, FX and Rates Strategist

Ishaan Dev Kapoor

FX & Rates

<ul>
<li>The September 2027 contract prices three further hikes and a one-in-three chance of a fourth, 55bp above the committee's own projected path. We buy ZQU7 at 95.325 (4.675%), $7.5k DV01.</li>
<li>Diesel is 67% above a year ago, yet core PCE is running at 2% annualised. Firms are absorbing the shock, wages show no pass-through and inflation breadth is narrowing.</li>
<li>Policy is near neutral and financial conditions have tightened since September. Two further hikes would make policy restrictive in a supply shock; a less hawkish 2027 committee makes them unlikely.</li>
</ul>


The September 2027 contract prices three further hikes and a one-in-three chance of a fourth, 55bp above the committee's own projected path. We buy ZQU7 at 95.325 (4.675%), $7.5k DV01.
Diesel is 67% above a year ago, yet core PCE is running at 2% annualised. Firms are absorbing the shock, wages show no pass-through and inflation breadth is narrowing.
Policy is near neutral and financial conditions have tightened since September. Two further hikes would make policy restrictive in a supply shock; a less hawkish 2027 committee makes them unlikely.


A Terminal Rate the Data Do Not Support: Buying September 2027 Fed Funds Futures

<ul>
<li>The EUR/USD seagull was salvaged at 3 pips against 19.5 paid after the 16 September hike, having been marked +181% on 21 August. The USD/INR short expired flat at 95.98.</li>
<li>The euro trade paid on fiscal dominance, not the US front end we entered on. We overrode the Iran exit rule because we read misread a three-week regime</li>
<li>FCNR carried the INR through a 20% rise in oil, but faltered as prices soared 37%. We still see US disinflation in the data, and think 3 hikes are rich.</li>
</ul>


The EUR/USD seagull was salvaged at 3 pips against 19.5 paid after the 16 September hike, having been marked +181% on 21 August. The USD/INR short expired flat at 95.98.
The euro trade paid on fiscal dominance, not the US front end we entered on. We overrode the Iran exit rule because we read misread a three-week regime
FCNR carried the INR through a 20% rise in oil, but faltered as prices soared 37%. We still see US disinflation in the data, and think 3 hikes are rich.


Learnings from Two Short-Dollar Positions in an Oil Crisis

Metals, Ores, and Mining Firms, Mint Finance

Pranay Yadav

Metals, Ores, and Mining Firms

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Macroeconomics

<ul>
<li>CPI dropped to 2.9% YoY in July, the lowest since March 2021, while Core CPI cooled to 3.2% YoY, reflecting a broad-based softening in inflation.</li>
<li>Retail sales surged 1% MoM, driven by a volatile 3.6% rise in motor vehicle sales, signaling resilient consumer spending despite mixed economic conditions.</li>
<li>Manufacturing and industrial production contracted, pushing the GDPNow forecast down to 2.4%, highlighting persistent weakness in these sectors.</li>
</ul>


CPI dropped to 2.9% YoY in July, the lowest since March 2021, while Core CPI cooled to 3.2% YoY, reflecting a broad-based softening in inflation.
Retail sales surged 1% MoM, driven by a volatile 3.6% rise in motor vehicle sales, signaling resilient consumer spending despite mixed economic conditions.
Manufacturing and industrial production contracted, pushing the GDPNow forecast down to 2.4%, highlighting persistent weakness in these sectors.


Mint Macro Roundup: U.S. Inflation Dips Below 3% Amid Stronger Retail Sales

Cross Asset Strategy

<ul>
<li>The July Nonfarm Payroll report showed only 114k jobs added, increasing the unemployment rate to 4.3%, the highest since 2021.</li>
<li>The Sahm rule, a reliable recession indicator, was triggered with a current value of 0.53, signaling a potential recession on the horizon.</li>
<li>FedWatch indicates a &gt;90% probability of a 50 basis point rate cut in September, up from 10% last week, due to recession fears.</li>
</ul>


The July Nonfarm Payroll report showed only 114k jobs added, increasing the unemployment rate to 4.3%, the highest since 2021.
The Sahm rule, a reliable recession indicator, was triggered with a current value of 0.53, signaling a potential recession on the horizon.
FedWatch indicates a &gt;90% probability of a 50 basis point rate cut in September, up from 10% last week, due to recession fears.


Recession Fears Resurface Triggering Yield Curve Normalization

<ul>
<li>The likelihood of imminent rate cuts has increased due to recent cooling in core CPI, driving anticipatory normalization of the yield curve.</li>
<li>According to FedWatch, expected rate cuts totaling 100 basis points by March 2025 are driven by cooling inflation, improving economic data, and the increasing fiscal burden of U.S. debt.</li>
<li>Historical data shows yield spread between 2Y and 10Y treasuries recovered just before and after rate cuts, signaling investor expectations front-running monetary easing. </li>
</ul>


The likelihood of imminent rate cuts has increased due to recent cooling in core CPI, driving anticipatory normalization of the yield curve.
According to FedWatch, expected rate cuts totaling 100 basis points by March 2025 are driven by cooling inflation, improving economic data, and the increasing fiscal burden of U.S. debt.
Historical data shows yield spread between 2Y and 10Y treasuries recovered just before and after rate cuts, signaling investor expectations front-running monetary easing. 


Yield Curve Normalisation on Rate Cut Anticipation

United States

Legacy Government (Sovereign) Generic Index-key ticker

US 2Y (USGG2YR INDEX)

A Terminal Rate the Data Do Not Support: Buying September 2027 Fed Funds Futures

September 2027 fed funds price 55bp more tightening than the FOMC’s own path. With underlying inflation near target and conditions tightening, we...

Ishaan Dev Kapoor

Learnings from Two Short-Dollar Positions in an Oil Crisis

Post-mortem on two short-dollar trades through the oil shock: a EUR/USD seagull salvaged at −85% and a flat USD/INR short. What paid, which exit...

Ishaan Dev Kapoor

Mint Macro Roundup: U.S. Inflation Dips Below 3% Amid Stronger Retail Sales

U.S. inflation fell below 3% for the first time in over three years. Despite mixed signals from the manufacturing sector, retail sales showed...

Mint Finance

Recession Fears Resurface Triggering Yield Curve Normalization

The recent market turmoil and dismal job reports have led to significant yield curve movements, with the 10Y-2Y spread showing substantial...

Mint Finance

Yield Curve Normalisation on Rate Cut Anticipation

Recent cooling in core CPI has increased the likelihood of rate cuts, driving anticipatory normalization of the yield curve with expected cuts...

Mint Finance

A Terminal Rate the Data Do Not Support: Buying September 2027 Fed Funds Futures

September 2027 fed funds price 55bp more tightening than the FOMC’s own path. With underlying inflation near target and conditions tightening, we...

Ishaan Dev Kapoor

Learnings from Two Short-Dollar Positions in an Oil Crisis

Post-mortem on two short-dollar trades through the oil shock: a EUR/USD seagull salvaged at −85% and a flat USD/INR short. What paid, which exit...

Ishaan Dev Kapoor

Mint Macro Roundup: U.S. Inflation Dips Below 3% Amid Stronger Retail Sales

U.S. inflation fell below 3% for the first time in over three years. Despite mixed signals from the manufacturing sector, retail sales showed...

Mint Finance

Recession Fears Resurface Triggering Yield Curve Normalization

The recent market turmoil and dismal job reports have led to significant yield curve movements, with the 10Y-2Y spread showing substantial...

Mint Finance

Yield Curve Normalisation on Rate Cut Anticipation

​Recent cooling in core CPI has increased the likelihood of rate cuts, driving anticipatory normalization of the yield curve with expected cuts...

Mint Finance

Recent cooling in core CPI has increased the likelihood of rate cuts, driving anticipatory normalization of the yield curve with expected cuts...