Daily Brief Macro: Steno Signals #184 – Here is the roadmap for the business cycle in 2025 and more

• Welcome to our weekly editorial on everything macro, where we aim to paint a medium-term picture of liquidity, growth, and inflation—and how these factors will impact your allocation.
• It seems The Donald has a penchant for late Friday tariff announcements, keeping markets on edge for a second consecutive Monday open.
• This pattern is starting to take shape, though we likely need a third occurrence before drawing statistical conclusions.

• Recent announcements of tariffs by the Trump administration have caused global tensions and retaliatory measures
• The tariffs are aimed at countries like Mexico, Canada, and China, with potential impacts on US companies and global supply chains
• The situation is evolving, with negotiations and potential escalations to watch for in the coming days

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• Debate surrounding potential increase in Russian pipeline gas to Europe, with uncertainty of timing and magnitude of flows
• Russia, Ukraine, Europe, and the US all have vested interests in potential negotiations for increased pipeline gas flows
• Impact on European natural gas balance and global gas balance if increased Russian pipeline flows were to manifest, with current base case price forecast for TTF market in 2025 and 2026 without embedding increase in Russian natural gas flows

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• The outlook for copper in the near term is positive, but the market interest in copper may mean higher prices
• Investing in copper may be expensive due to high demand and M&A activity in the sector
• Finding a pure play copper company of significant scale on the ASX may be challenging, with considerations of China’s impact on copper demand and production levels in mind.

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• The podcast discusses advanced portfolio optimization techniques in the world of digital assets
• Modern portfolio theory (MPT) is a key concept in investing, but newer models and techniques like Black Litterman and shrinkage estimators are being used to address limitations
• Thematic model grouping and consolidated alpha optimization are two key approaches to portfolio construction discussed in the episode.

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• Long gold has been a winning strategy over the last two calendar years. Gold futures has clocked a 125% increase since start of 2019 until now.
• Gold has seen its strongest rally yet over the last two years, breaking through previous all-time highs with minimal retracement.
• GLD ETF has delivered a 7.4% price returns over the last month and an 8% upside YTD in 2025 so far.

• SGX Iron Ore Futures rose by $2.25/ton, closing at $107.30/ton on Feb 7, after trading within a $5.50/ton range, the widest in recent weeks.
• Strong demand from steel mills, a weaker U.S. dollar (-0.4%), and supply risks from Rio Tinto port clearances drove iron ore prices higher.
• Prices trade above key moving averages, with RSI nearing the overbought zone (65.08), suggesting a potential correction in line with historical post-CNY trends.

• Following last year’s political drama in France, the Bayrou government successfully passed a 2025 budget last week.
• The smooth passage of the budget is likely a temporary political reprieve.
• This situation does not factor in the probable fiscal impact of potential US tariffs.

• RBI cut its policy rate by 25bp on 7th Feb’25. With inflation set to moderate substantially over the rest of CY25, we expect another 75bp of rate cuts by Aug’25. 
• Delhi election results on 8th Feb’25 saw resounding BJP victory after 27 years. Urban governance, a major focus of Budget’25, will be bolstered in Delhi and Mumbai, India’s largest cities. 
• With the policy rate at 5.5% by Aug’25, and substantial income tax cuts boosting PCE, real GDP should return to 8% growth in FY26 (Apr’25-Mar’26). EPS growth will benefit too. 

• Banxico (the Bank of Mexico) cut the policy rate by 50bps to 10.5%, with a cautious stance and a split vote. Inflation has fallen but remains above target.
• Global risks, including Trump’s tariff threats, add uncertainty. Despite economic weakness, some monetary tightening may still be needed.
• Banxico plans further 50bps cuts, likely pausing at 8.0%, depending on economic conditions.