In today’s briefing:
- Steno Signals #186 – The year of the weak USD is upon us
- Over the Horizon: A Review of Thematic Trends
- CX Daily: Is China’s Commercial Space Sector Ready to Blast Off?
- [US Crude Oil Options Weekly 2025/08] WTI Surrendered Gains on Weak Economic Signals
- [US Nat Gas Options Weekly 2025/08] Henry Hub Extends Gains for Third Week Amid Sustained Cold Snap
- Macro Daily: Inflation: 1h-Feb
- Korea: 25bp Rate Cut To 2.75% (Consensus 2.75%) in Feb-25
- Euro Area Wage Growth Is Too Hot
Steno Signals #186 – The year of the weak USD is upon us
- I wanted to get the German election results before releasing my weekly editorial, and as far as I can judge, we are talking about a middle-of-the-road outcome, which should be seen as a net positive for European assets for now.
- CDU (Conservatives) and SPD (Social Democrats) will be able to form a GroKo (Grand Coalition) with 328 mandates, which is a coalition that could likely find some common ground around spending more and removing the debt brake, at least temporarily.
- A permanent removal of the debt brake will require the backing of an additional party.
Over the Horizon: A Review of Thematic Trends
- Our most prominent theme over the last year has been to BUY HK/China markets. We are still very bullish on these SECULAR BULL markets.
- We have been Bullish on gold and discussed the asymmetry of its price movements given the global tightening starting in 2021/22. Gold will continues to benefit from negative real rates.
- We have been Bearish on Japan since publishing Technically Speaking: Japan Meets Resistance and Hong Kong Finally Breaks Downtrend on April 2, 2024. We also remain bearish on India.
CX Daily: Is China’s Commercial Space Sector Ready to Blast Off?
- Space / Cover Story: Is China’s commercial space sector ready to blast off?
- Railways /Analysis: Twists and turns abound for Chinese-built railways in Southeast Asia
- Charities /In Depth: Rule change leaves some Chinese charities starving for funding
[US Crude Oil Options Weekly 2025/08] WTI Surrendered Gains on Weak Economic Signals
- WTI futures fell by 0.5% for the week ending 21/Feb, marking its fifth consecutive weekly drop. Prices fell due to bearish economic data and rising crude inventories.
- WTI options Put/Call volume ratio surged to 1.62 on 21/Feb (Fri) from 0.94 on 14/Feb, as call volume rose by 15.9% WoW while put volume jumped by 100%.
- WTI OI PCR fell to 0.95 on 21/Feb compared to 0.96 on 14/Feb. Call OI increased by 6.5% WoW, while put OI rose by 6.1%.
[US Nat Gas Options Weekly 2025/08] Henry Hub Extends Gains for Third Week Amid Sustained Cold Snap
- For the week ending 21/Feb, U.S. natural gas prices gained 13.7% on the back of colder weather forecasts, rising LNG exports, and falling inventories.
- Henry Hub Put/Call volume ratio rose to 0.72 on 21/Feb from 0.66 on 14/Feb as call volumes increased by 81.4% WoW, while put volumes surged by 98%.
- Henry Hub OI PCR rose to 1.04 on 21/Feb from 0.98 on 14/Feb. Call OI rose by 7.1% WoW, while put OI increased by 13.3%.
Macro Daily: Inflation: 1h-Feb
- Inflation for the first half of February came in at 0.15% bw, given the drop in prices of most agricultural goods.
- The figure was above our forecast of 0.09% bw and slightly below the market consensus of 0.18% bw.
- Our forecast error is explained by a higher-than-expected drop in tomato prices (-25% bw vs. -18% bw).
Korea: 25bp Rate Cut To 2.75% (Consensus 2.75%) in Feb-25
- The Bank of Korea cut its base rate by 25bp to 2.75%, aligning with expectations, as downside risks to economic growth intensified amid stabilising inflation and slowing household debt.
- Domestic demand remains weak, and US tariff policies constrain export growth. Thus, the 2025 GDP growth forecast was sharply revised downward to 1.5% from 1.9%.
- Future rate cuts will depend on balancing inflation risks, exchange rate volatility, and financial stability, with a particular focus on the impact of global trade policies and domestic political uncertainty.
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Euro Area Wage Growth Is Too Hot
- Negotiated wages grew by 4.1% in Q4, slowing sharply from Q3, but little changed on the average from 2024 and 2023. It is not yet on an obvious path of improvement.
- Broader labour costs have also slowed and are suggesting unit labour cost growth of around 4% y-o-y, although that would mark an abrupt rise in the quarterly pace.
- Labour costs are growing too fast to be consistent with a sustainable return to the ECB’s inflation target. We expect its easing cycle to end in H1, much earlier than priced.
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