Daily Brief Macro: New Era of Higher Inflation Volatility Forces Central Bank Policy Conduct Reset and more

• Inflation shocks have become more frequent.  Central banks will show greater commitment to their chosen inflation targets, and forward guidance will no longer determine the future path of policy rates.
• More proactive measures by central banks to keep inflationary expectations well-anchored implies more volatile short-term interest rates compared to their long-term counterparts in an environment of higher and volatile inflation.
• US Treasury bond investors will probably demand a higher term premium until they are comfortable with the Fed’s policy reaction function under new leadership without forward guidance.

• Hong Kong imported almost 100 tonnes of Russian gold in 2026’s first seven months, while July transactions showed that Delivery Connect, central clearing and OTC execution can work.
• International-Bank financing is the next test, with global gold OTC derivatives already exceeding US$1.1 trillion outstanding, showing the financial activity that accepted bullion can support beyond physical delivery.
• Longer term, a large pool of internationally accepted bullion could deepen financing and trading beyond each new shipment, extending Hong Kong’s role from physical delivery to offshore gold markets.

Highlights

• Natural rubber production surges 22% MoM in June to 61,000 tonnes.

• Compound rubber imports jump 46% year-on-year to 108,148 tonnes in Q1.

• Natural rubber consumption fell 6.1% year-on-year to 341,000 tonnes in Q1

• Analyzing last 18 year’s year-on-year earnings growth patterns, we conclude that Asian earnings are highly cyclical, with average peak-to-trough length of 24-30 months, unless driven by a sharp liquidity spike.
• Korean and Taiwanese earnings cycles are at their peaks and HK/China is close. Among the large markets, only India is at the bottom of its earnings growth cycle. 
• Onshore China valuations could stay flat; Taiwan PE could correct more. HK and Korean PE should rise. Indian valuations could correct slightly, in line with previous earnings cycle bottoms.

• Sentiment: the froth is gone. Investor sentiment has cooled sharply and is now, at most, moderately bullish.
• Technology SMA near all-time highs. Sentiment is close to all-time highs. Not an immediate sell signal, but a reason to test the Tech case and make sure conviction remains high.
• Gold: getting hot again. Bullish sentiment is building again across indicators, pushing our SMA back to the 96th percentile. Not quite at recent extremes, but close.

• In Depth: China’s Diagnostic Firms Bet on a New Front in Global Health (Johannesburg, South Africa) — For years, funding for global health aid has flowed into this complicated, vibrant metropolis to address public health crises including HIV and AIDS and tuberculosis (TB).
• Analysis: China Adopts Market-Driven Solution to Stale Loan Rate Benchmark For nearly seven years, China’s commercial lenders have relied on a single anchor to price their loans — the loan prime rate (LPR).
• Now, the country’s banking system is testing the waters with a dynamic new benchmark.

• A key element in the equation to watch closely is the interplay between Iran, Saudi Arabia, and the Houthis and how ultimately the Strait of Hormuz issue is resolved.                
• Saudi Arabia postponed a meeting with Iran and other Gulf states due to intensified Houthi attacks on Saudi military and energy assets. Thus far and critically, Abqaiq has been spared.                                 
• If Iran can somehow convince the Houthis to “tone it down”, there is the possibility of an agreement to “manage” the Strait of Hormuz without the United States.         

• The IRI/CCSR prediction plume goes out every month and travels far — onto commodity desks, into insurance notes, through agricultural outlooks.
• It is among the most widely shared forecasts in macro, and among the least well read.
• We backtested all 291 plume starts since May 2002, roughly 6,800 model runs, against the observed Oceanic Niño Index. Three things stand out.