Friday Chart Book

From Musk to Dawn

A holiday does wonders. While I was unwinding from all the macro noise, I regained much-needed clarity by avoiding the micro noise and gyrations. The week has been very kind to me as I was anticipating softer data during the week, resulting in a decent bond rally, which I rode up until payrolls, where I entered only with a modest long, which I promptly closed. I rarely make money while being away, so that was a welcome change.

Meanwhile, the political circus continues, with the Musk-Trump fall-out gaining much attention. To me, it probably weakens Trump’s position to some extent. While this development was on the cards from day one, the repercussions will likely impact Trump far more than he currently realises. Markets have taken notice. Could it be that the USD weakness might halt just right here? It’s certainly a possibility, and I’m considering it against a backdrop of pretty extreme short FX positioning.

Payrolls came in stronger, not only against consensus but more importantly, the whisper, which was weaker given the early week signals from alternative data sources. Average hourly earnings rose by 0.42% month-over-month in May, following a 0.19% increase in April. This leaves annual wage growth at 3.9%. Overall, wage growth is gradually slowing, in line with a more balanced labour market. Bond markets, however, didn’t like any of the messages portrayed and promptly sold off, especially in the front-end.

The SFRZ5-Z6 spread is finally moving. After pushing rate cuts into next year, the reality might slowly set in that this unique cycle might be ending. Why would we discount rate cuts next year?

Paper Alfa’s nominal GDP tracker is still running around the 4.2% mark, cooling off from the 5% level, suggesting bonds are possibly mildly overshooting today’s labour market numbers.

I will have more thoughts as I’m settling back into the seat firmly this weekend. For now, the 2025 buy-and-hold portfolio is hitting close to the 10% mark, and I’m very happy with such a return given all the noise over the past nearly 6 months.

I am excitedly looking forward to what’s next to unfold. For now, we have been navigating markets well. Let’s now go into the latest Macro D analysis of the latest central bank rhetoric before scanning 250+ chart setups as we close out the week.

Have a blessed weekend!