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Macro Regime — 2010-W45

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↩ Home Macro index ← 2010-11 board

⚠ 0 very-stale + 2 stale series across the four blocs — flagged inline.

Standing macro backdropBORROWED

Borrowed from its month (2010-11); the weekly reads the standing object, it does not recompute the aggregate.

United States: goldilocks / reflation
China: overheating / late-cycle
Euro area: expansion, at target
Japan: deflation watch

month aggregated actuals

United States

Indicator	Basis	2010-11	2010-10	Change
Core CPI	% MoM	0.14 2010-11-01	0.05 2010-10-01	→ 0.09
Core PCE	% YoY	1.12 2010-11-01	1.08 2010-10-01	→ 0.04
CPI (YoY)	% YoY	1.08 2010-11-01	1.17 2010-10-01	→ -0.09
FX vs USD	px	not recorded
GDP	% QoQ ann.	not recorded
PMI (mfg)	index	56.9 2010-11-01	54.4 2010-10-01	▲ 2.5
PMI (svc)	index	54.3 2010-11-03	53.2 2010-10-05	▲ 1.1
Policy rate	%	0.25 2010-11-30	0.25 2010-10-31	→ 0
2s10s slope	pp	2.36 2010-11-30	2.29 2010-10-29	▲ 0.07
Unemployment	%	9.8 2010-11-01	9.4 2010-10-01	▲ 0.4
10Y yield	%	2.81 2010-11-30	2.63 2010-10-29	▲ 0.18
2Y yield	%	0.45 2010-11-30	0.34 2010-10-29	▲ 0.11

China

Indicator	Basis	2010-11	2010-10	Change
CPI (YoY)	% YoY	4.4 2010-11-01	3.6 2010-10-01	▲ 0.8
FX vs USD	px	not recorded
GDP	% YoY	not recorded
PMI (mfg)	index	55.2 2010-11-01	54.7 2010-10-01	▲ 0.5
PMI (svc)	index	57.4 2010-11-01	57.9 2010-10-01	▼ -0.5
Policy rate	% (1Y LPR)	not recorded
2s10s slope	pp	0.95 2010-11-30	1.3 2010-10-29	▼ -0.35
Unemployment	%	not recorded
10Y yield	%	3.97 2010-11-30	3.68 2010-10-29	▲ 0.29
2Y yield	%	3.02 2010-11-30	2.38 2010-10-29	▲ 0.64

Euro area

Indicator	Basis	2010-11	2010-10	Change
CPI (YoY)	% YoY	1.9 2010-11-30	1.9 2010-10-29	→ 0
FX vs USD	px	not recorded
GDP	% YoY	0.4 2010-11-01	0.2 2010-10-01	→ 0.2
PMI (mfg)	index	55.5 2010-11-23	54.1 2010-10-21	▲ 1.4
PMI (svc)	index	55.2 2010-11-23	53.2 2010-10-21	▲ 2
Policy rate	%	1 2010-11-04	1 2010-10-07	→ 0
Unemployment	%	10.1 2010-11-30	10.1 2010-10-29	→ 0
10Y yield	%	3.72 2010-11-01	3.33 2010-10-01	▲ 0.39

Japan

Indicator	Basis	2010-11	2010-10	Change
Core CPI	% YoY	-0.8 2010-11-25	-1.5 2010-10-26	▲ 0.7
CPI (YoY)	% YoY	0.2 2010-11-25	-0.6 2010-10-26	▲ 0.8
FX vs USD	px	not recorded
GDP	% YoY	not recorded
PMI (mfg)		not recorded
Policy rate	%	0.1 2010-11-05	0.1 2010-10-28	→ 0
Unemployment	%	5.1 2010-11-29	5.1 2010-10-30	→ 0
10Y yield	%	1.16 2010-11-01	0.9 2010-10-01	▲ 0.26

ThesisL0

(historical week — no Claude narration run)

Standing pictureL1

United States

goldilocks / reflation

expansion · below target · on hold

Improving growth with inflation at/below target — the benign mix. Cyclicals, small-caps and risk assets broadly tend to lead; long bonds lag as growth firms.

● 2 active

China

overheating / late-cycle

expansion · above target · on hold

Above-trend growth with above-target inflation. Late-cycle: cyclicals and inflation beneficiaries can still run, but the central bank is biased to tighten, so duration and high-multiple growth are exposed.

● 1 active

Euro area ⚠ stale

expansion, at target

expansion · at target · on hold

Solid growth with inflation near target. Constructive for risk assets broadly; the watch-item is whether inflation starts to push above target and shifts policy.

● 2 active

Japan ⚠ stale

deflation watch

unknown · deflation risk · on hold

Activity is soft and inflation is at/below zero — the risk is entrenched deflation. Favors duration (long bonds) and quality; cyclicals struggle until policy eases decisively. The catalyst to watch is stimulus / a policy cut.

● 1 active

Mechanisms & channelsL2

United States

M5Growth acceleration (expansionary PMI)

Trigger: pmi_mfg: 54.4 → 56.9 (+2.5)

Manufacturing PMIPMI — Purchasing Managers' Index. Above 50 = the sector is expanding vs last month; below 50 = contracting. A timely read on activity. is above 50 and rising.
Why: A reading above 50 means more firms report expanding activity than contracting; rising means the breadth of expansion is widening — a timely, forward-looking growth signal.
Earnings expectations broaden toward economically-sensitive sectors.
Why: Stronger activity feeds revenue and pricing power first in the parts of the market geared to the physical economy.
Cyclicalscyclicals — Sectors whose earnings rise and fall with the economic cycle — industrials, materials, energy, consumer discretionary., small-caps, EM and commodities lead; defensivesdefensives — Sectors whose demand is steady through the cycle — consumer staples, utilities, healthcare. They outperform when growth slows. lag.
Why: Capital rotates toward the cycle — industrials, materials, energy, smaller and more leveraged firms, and the commodities their activity consumes — while steady-demand defensives become relatively less attractive.

Helps
cyclicals (industrials, materials, energy)small-capsEM equitycommodities

Hurts
defensive sectors (staples, utilities)long government bonds

Caveat: If acceleration also stokes inflation fears, the bond-yield response can offset the equity benefit (good growth becomes 'too good'), especially late-cycle.

House-view hook — empty (textbook default; Stephen's view bakes in here).

M9Long-end yield spike / term-premium rise

Trigger: yield_10y: 2.65 → 2.76 (+0.11)

The 10-year yield jumps.
Why: The long yield sets the cost of long-term money for the whole economy and the discount ratediscount rate — The rate used to convert a future cash flow into today's value. A higher discount rate makes far-off cash flows worth less now. for the longest cash flows.
The discount rate on all long-dated cash flows rises.
Why: Equity valuations and long-bond prices are present values of distant cash flows; a higher long yield shrinks those present values.
Long-duration growth equities compress, long bonds fall, gold is pressured.
Why: The longest-duration assets are most exposed to the discount-rate move, and a higher real yieldreal yield — The yield after subtracting expected inflation — what a lender actually earns in purchasing power. Real yield ≈ nominal yield − expected inflation. raises the opportunity cost of holding non-yielding gold.

Helps
banks/insurers (reinvestment)cashvalue over growth

Hurts
long-duration growth equitieslong-dated bondsgoldrate-sensitive REITs/utilities

Caveat: Granularity is daily, so a single-session jump can be noise; a sustained multi-session move is the real signal. Distinguish a growth-driven rise (risk-on) from a supply/term-premium rise (risk-off).

House-view hook — empty (textbook default; Stephen's view bakes in here).

China

M5Growth acceleration (expansionary PMI)

Trigger: pmi_mfg: 54.7 → 55.2 (+0.5)

Manufacturing PMI is above 50 and rising.
Why: A reading above 50 means more firms report expanding activity than contracting; rising means the breadth of expansion is widening — a timely, forward-looking growth signal.
Earnings expectations broaden toward economically-sensitive sectors.
Why: Stronger activity feeds revenue and pricing power first in the parts of the market geared to the physical economy.
Cyclicals, small-caps, EM and commodities lead; defensives lag.
Why: Capital rotates toward the cycle — industrials, materials, energy, smaller and more leveraged firms, and the commodities their activity consumes — while steady-demand defensives become relatively less attractive.

Helps
cyclicals (industrials, materials, energy)small-capsEM equitycommodities

Hurts
defensive sectors (staples, utilities)long government bonds

Caveat: If acceleration also stokes inflation fears, the bond-yield response can offset the equity benefit (good growth becomes 'too good'), especially late-cycle.

House-view hook — empty (textbook default; Stephen's view bakes in here).

What would change the read

Growth slowdown (deepening contraction) Manufacturing is not both below 50 and falling, so the deepening-contraction channel is dormant. It fires when a sub-50 PMI turns lower — that is the trigger for the defensive rotation and a bid for duration (a sub-50 PMI that is *rising* is the trough channel, M13, not this one).
Long-end yield spike / term-premium rise The 10-year yield isn't spiking, so this channel is dormant. A jump of ≥0.1pp would fire it — watch it because it compresses the highest-multiple growth names and long bonds fastest.
Yield-curve inversion (2s10s < 0) The 2s10s curve is positive (not inverted), so this warning channel is dormant. It fires if 2s10s turns negative — watch it because inversion is a classic late-cycle recession warning, though with long and variable lead times.

Euro area

M5Growth acceleration (expansionary PMI)

Trigger: pmi_mfg: 54.1 → 54.6 (+0.5)

Manufacturing PMI is above 50 and rising.
Why: A reading above 50 means more firms report expanding activity than contracting; rising means the breadth of expansion is widening — a timely, forward-looking growth signal.
Earnings expectations broaden toward economically-sensitive sectors.
Why: Stronger activity feeds revenue and pricing power first in the parts of the market geared to the physical economy.
Cyclicals, small-caps, EM and commodities lead; defensives lag.
Why: Capital rotates toward the cycle — industrials, materials, energy, smaller and more leveraged firms, and the commodities their activity consumes — while steady-demand defensives become relatively less attractive.

Helps
cyclicals (industrials, materials, energy)small-capsEM equitycommodities

Hurts
defensive sectors (staples, utilities)long government bonds

Caveat: If acceleration also stokes inflation fears, the bond-yield response can offset the equity benefit (good growth becomes 'too good'), especially late-cycle.

House-view hook — empty (textbook default; Stephen's view bakes in here).

M9Long-end yield spike / term-premium rise

Trigger: yield_10y: 3.32932 → 3.71825 (+0.38893)

⚠ Fired on a stale print: yield_10y as of 2010-11-01 (13d old). The change may predate current conditions — treat as provisional.

The 10-year yield jumps.
Why: The long yield sets the cost of long-term money for the whole economy and the discount rate for the longest cash flows.
The discount rate on all long-dated cash flows rises.
Why: Equity valuations and long-bond prices are present values of distant cash flows; a higher long yield shrinks those present values.
Long-duration growth equities compress, long bonds fall, gold is pressured.
Why: The longest-duration assets are most exposed to the discount-rate move, and a higher real yield raises the opportunity cost of holding non-yielding gold.

Helps
banks/insurers (reinvestment)cashvalue over growth

Hurts
long-duration growth equitieslong-dated bondsgoldrate-sensitive REITs/utilities

House-view hook — empty (textbook default; Stephen's view bakes in here).

Japan

M9Long-end yield spike / term-premium rise

Trigger: yield_10y: 0.903 → 1.161 (+0.258)

⚠ Fired on a stale print: yield_10y as of 2010-11-01 (13d old). The change may predate current conditions — treat as provisional.

The 10-year yield jumps.
Why: The long yield sets the cost of long-term money for the whole economy and the discount rate for the longest cash flows.
The discount rate on all long-dated cash flows rises.
Why: Equity valuations and long-bond prices are present values of distant cash flows; a higher long yield shrinks those present values.
Long-duration growth equities compress, long bonds fall, gold is pressured.
Why: The longest-duration assets are most exposed to the discount-rate move, and a higher real yield raises the opportunity cost of holding non-yielding gold.

Helps
banks/insurers (reinvestment)cashvalue over growth

Hurts
long-duration growth equitieslong-dated bondsgoldrate-sensitive REITs/utilities

House-view hook — empty (textbook default; Stephen's view bakes in here).

What would change the read

Inflation surprise (upside) Core inflation is steady, so the upside-surprise channel is quiet. It would fire on a core reading ≥0.2pp above the prior — watch it because that is what forces a central bank to stay restrictive and pressures the longest-duration assets first.
Inflation surprise (downside / disinflation) Core inflation isn't cooling fast enough to trigger the disinflation channel. A fall of ≥0.2pp would fire it — worth watching because it is the cleanest tailwind for long-duration growth and government bonds.
Monetary easing (rate cut) The policy rate is on hold, so the easing channel is dormant. A cut would fire it — it matters because the first cut of a cycle typically broadens a rally and pressures the currency.

The dataL3

United States

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.20	1.08	+0.12 ▲	2010-11-14
Core CPI	0.14	0.00	+0.14 ▲	2010-11-01
Core PCE	1.12	1.08	+0.04 ▬	2010-11-01
Policy rate	0.25	0.25	+0.00 ▬	2010-11-14
GDP	2.00	2.10	-0.10 ▬	2010-10-29
PMI (mfg)	56.90	54.40	+2.50 ▲	2010-11-01
PMI (svc)	54.30	53.20	+1.10 ▲	2010-11-03
Unemployment	9.60	9.80	-0.20 ▼	2010-11-05
10Y yield	2.76	2.65	+0.11 ▲	2010-11-12
2Y yield	0.51	0.44	+0.07 ▲	2010-11-12
2s10s slope	2.25	2.21	+0.04 ▬	2010-11-12
FX vs USD	n/a

China

Indicator	Current	Prior	Δ	As of
CPI (YoY)	4.40	3.60	+0.80 ▲	2010-11-01
Policy rate	n/a
GDP	n/a
PMI (mfg)	55.20	54.70	+0.50 ▲	2010-11-01
PMI (svc)	57.40	57.90	-0.50 ▼	2010-11-01
Unemployment	n/a
10Y yield	3.95	3.95	+0.00 ▬	2010-11-12
2Y yield	2.67	2.61	+0.06 ▲	2010-11-12
2s10s slope	1.28	1.34	-0.06 ▼	2010-11-12
FX vs USD	n/a

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.90	1.80	+0.10 ▬	2010-10-29
Policy rate	1.00	1.00	+0.00 ▬	2010-11-04
GDP	0.40	0.20	+0.20 ▬	2010-11-01
PMI (mfg)	54.60	54.10	+0.50 ▲	2010-11-02
PMI (svc)	53.30	53.20	+0.10 ▬	2010-11-04
Unemployment	10.10	10.10	+0.00 ▬	2010-10-29
10Y yield	3.72	3.33	+0.39 ▲	2010-11-01 ⚠
FX vs USD	n/a

Japan

Indicator	Current	Prior	Δ	As of
CPI (YoY)	-0.60	-0.90	+0.30 ▲	2010-10-26
Core CPI	-1.50	-1.50	+0.00 ▬	2010-10-26
Policy rate	0.10	0.10	+0.00 ▬	2010-11-05
GDP	n/a
PMI (mfg)	n/a
Unemployment	5.10	5.10	+0.00 ▬	2010-10-30
10Y yield	1.16	0.90	+0.26 ▲	2010-11-01 ⚠
FX vs USD	n/a

Concept libraryL3

Terms marked ✓ are linked inline above — click any dotted term in the text to expand it in place.

2s10s: The gap between the 10-year and 2-year government bond yields. Positive = normal upward-sloping curve; negative ('inverted') = a classic late-cycle/recession warning.
PMI ✓: Purchasing Managers' Index. Above 50 = the sector is expanding vs last month; below 50 = contracting. A timely read on activity.
carry trade: Borrowing in a low-rate currency (long the yen's case) to buy higher-yielding assets elsewhere. It unwinds violently when the funding rate rises or the funding currency strengthens.
credit impulse: The change in the flow of new credit into an economy. A rising impulse front-runs stronger demand for commodities and cyclical goods, with a lag.
cyclicals ✓: Sectors whose earnings rise and fall with the economic cycle — industrials, materials, energy, consumer discretionary.
defensives ✓: Sectors whose demand is steady through the cycle — consumer staples, utilities, healthcare. They outperform when growth slows.
discount rate ✓: The rate used to convert a future cash flow into today's value. A higher discount rate makes far-off cash flows worth less now.
disinflation: Inflation that is still positive but falling (prices rising more slowly) — distinct from deflation, where prices actually fall.
duration: How sensitive an asset's price is to interest rates. 'Long-duration' assets (long bonds, fast-growing stocks whose profits are years away) move most when rates change.
net interest margin: The spread a bank earns between what it charges on loans and pays on deposits. Higher short rates / steeper curves tend to widen it.
nominal yield: The headline interest rate on a bond, before subtracting inflation.
policy rate: The interest rate a central bank sets directly (e.g. the Fed funds rate, the ECB deposit rate, China's LPR). It anchors all other rates.
rate path: The market's expectation of where the policy rate goes over the next year or two — not just today's level, but the whole expected trajectory.
real yield ✓: The yield after subtracting expected inflation — what a lender actually earns in purchasing power. Real yield ≈ nominal yield − expected inflation.
term premium: The extra yield investors demand to hold a long bond instead of rolling short ones — compensation for tying money up and for issuance/inflation risk.