Daily Brief Macro: Fund Managers Are Long Commodities Again and more

• Fund Managers Are Long Commodities Again Be careful if you’re heavily long commodities at the moment.
• The Bank of America survey usually always works as a great contra sentiment indicator.
• If fund managers are heavily long commodities – prices tend to top out.

• Strong dollar not seen as a problem for the US or the Fed, more concerning for the rest of the world
• Unlikely to see coordinated global intervention due to high hurdles and lack of exceptional circumstances
• Dollar CNY stability due to PBOC holding it down, may welcome cooling pressures on the currency from Japan and Korea verbal interventions

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• Investors have become more hawkish about the outlook for Fed policy compared to Federal Open Market Committee (FOMC) members for the first time since the infamous taper tantrum in 2013
• Engineering a policy pivot away from higher for longer rhetoric towards policy rate cuts will provide a communication challenge if sticky service sector inflation persists.
• Profligate fiscal policy complicates the Fed’s prospective conduct. The required measures for sustainable fiscal policy are off-limits, raising the possibility of higher inflation to stabilise the debt-to-GDP ratio.    

• The past week saw insights on Medikaloka Hermina (HEAL IJ), PT Avia Avian (AVIA IJ), Vinfast (VFS US), CP FOODS (CPF TB), and Johor Plantations IPO.
• There were also insights on Singapore REITS, 14 stocks to own in ASEAN from Dr. Andrew Stotz, CFA,  CrossASEAN Ground Zero looking at ROTI, Indonesian Hospitals and the Tower sector. 
• The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.

• Inflation data has been hotter than expected, remaining stubbornly above 3%
• Demand in the economy has been robust, with strong retail sales and job reports
• Richmond Fed President Tom Barkin discusses potential factors influencing inflation and the need for offsetting housing strength in the economy

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Welcome to our weekly “the week at a glance” publication where we dissect the most important central bank meetings and key figure releases in a short and sweet format.
• This week we focus on PCE prices, European PMIs and the Bank of Japan.
• Event 1: European PMIs (Tues): A lukewarm, but positive, surprise.

• Calmness returned to pockets of cross asset markets last week.
• The long end of the US yield curve got off its highs, crude got back under USD 90 and equities are left as the only truly hurt asset with SPX dipping under 5k for the first time since Feb.
• Month-to-date, Energy remains the only sector in green, underlining what we have been saying since the inception of this newsletter

• Ben Bernanke’s review of forecasting at the Bank of England raised many suggestions. We hope the BoE doesn’t dodge two aspects critical to improving its guidance.
• Inflation expectations are poorly captured in forecasts, contributing to misguided market views and leaving MPC members open to attack when critiquing surging wages.
• MPC rate expectations would best replace the conditioning rate path. Absent that, market rates are better than alternatives so that path should not be de-emphasised.

Note: This is part of an external compendium of responses to the Bernanke review.