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Morning Macro 22nd September
S&P500 and Nasdaq make yet more all-time highs with gold following closely behind, made more interesting as both the dollar and the US 2-year yield have both rallied for 4 days since the Fed meeting.
Not the 2-year US yield bounced from key 3.44% support (Chart 1, TradingView)

While Goldman’s Total Positioning Indicator is still slightly underweight US equities. (Chart 2, Goldman Sachs Global Investment Research)
While Morgan Stanley highlights how aggressively retail have been buying equities this year (Chart 4 & 4, MS QDS)
*A GOVERNMENT SHUTDOWN LOOMS AS THE SENATE REJECTS THE LATEST SPENDING BILL

Key data this week –
Monday – FOMC Miran speech!
Tuesday – GLOBAL services & mfg. PMIs, FEDs Powell speech
Wednesday – US new home sales, German IFO
Thursday – Weekly jobless claims
Friday – Core PCE inflation data

Yesterday’s 10-year TIPS auction lacking demand. Bid/cover ratio was 2.2 – the lowest since summer 2022. 10-year treasury sold off and the yield is now trading around 4.13%, up from sitting just above 4% pre-FOMC.

The DXY and 2s5s10s fly correlation breaks down (Figure 1). DXY remains depressed despite bouncing back due to Powell’s slightly more hawkish tone at FOMC on Wednesday.
The S&P 500 hit an intraday record high at 6656 points, now up 37.6% from April low! But for international investors, dollar depreciation had reduced returns; in EUR and GBP terms, it is lower than pre-Liberation Day. (Figure 2)

The Bank of England held rates at 4%, despite two dissents. Governor Bailey hinted towards more upcoming cuts; OIS pricing 36 bps of cuts over next 12 months. Trump and Starmer announce US-UK technology partnership during state visit. Focussing on AI development and nuclear energy, Microsoft will invest $30 billion and Google $6.8 billion into UK technology and research. Total pledged investment by US companies in the UK is $204 billion. This is a Memorandum of Understanding, so is not legally binding and is only a promise to cooperate.

US stake in Intel produces $5 billion profit! Trump announced 10% US stake in Intel at end of August and Nvidia revealed $5 billion investment and chip manufacturing partnership yesterday, sending Intel share price up 30%! (Figure 3)

Japan inflation as expected at 2.7% y/y in August, down from 3.1% in July. Core measure also 2.7%. Government subsidies to electricity prices put significant downward pressure but food prices rose 7.2% y/y. The Bank of Japan held rates at 0.5% at this morning’s decision.
Germany now in serious deflation: August PPI -2.2% y/y, far below expectations for -1.7%. This is the 6th consecutive decline and accelerated from -1.5% in July. Much lower energy costs weighed on the data.

No significant data today.

Morning Macro 18 September:
The Fed delivered its first rate cut since December, trimming 25 bps and pencilling in two more this year. Powell framed the move as insurance against “worsening employment conditions,” but stressed inflation risks remain. The meeting was messy: one FOMC member still projects a hike, while new governor Stephen Miran dissented for a deeper 50 bps cut. “There’s no risk-free path now,” Powell admitted.
The dot plot seemed doveish at first (Figure 1). Rates seen at 3.6% end-2025 (down from 3.9% in June), 3.4% in 2026, and 3.1% in 2027, with the long-run unchanged at 3%. Growth nudged higher (GDP 1.6% in 2025, 1.8% in 2026), inflation remains sticky (3% in 2025, easing to 2.6% in 2026), and unemployment steady at 4.5% before dipping.

Markets were disappointed as Powell reverted to a slightly more hawkish tone than in Jackson Hole. A fleeting Treasury rally fizzled, with 10-year yields up 6 bps to 4.09%, rejecting the 4% level. The EURUSD reversed from its break out (Figure 2). This pushing gold down to $3,639/oz and silver is now off 1.7% to $41.48 from its pre-FOMC peak. Gold has outperformed Silver in recent sessions seeing the Gold/Silver ratio tick up further to 87.75, but still remaining fairly neutral. Equities are mixed: S&P e-mini +0.3% since yesterday’s open, but Asia didn’t fair so well – CSI 300 is down 1.05% in the same period, and the Hang Seng is off 1.35%.

US housing starts tumbled 8.5% compared to the month prior in August to a 1.31m seasonally adjusted annualised rate – the weakest since May – as swelling inventories forced builders to slam the brakes. Single-family starts dropped 7% to an 890k pace, while multifamily fell nearly 12%. Permits sank to a five-year low, signalling further pain (Figure 3). Yet there’s relief on financing: 30-year mortgage rates slid to 6.39%, the lowest in almost a year, spurring refis to their strongest since 2022 and lifting purchase applications.
China will send the container ship Istanbul Bridge on an 18-day voyage from Ningbo-Zhoushan, the world’s largest port, to Felixstowe on Sept. 20 – escorted by icebreakers along Russia’s Northern Sea Route, in hopes of building a regular container service linking Asia and Europe via the Arctic. If realised, the route would shave more than a week off the Suez journey.
Data Today: BoE Rate decision, Philly Fed Mfg, Jobless Claims, China FDI