Macro Intelligence · Weekly · deep read

Macro Regime — 2013-W50

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↩ Home Macro index ← 2013-12 board

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

Standing macro backdropBORROWED

Borrowed from its month (2013-12); the weekly reads the standing object, it does not recompute the aggregate.

United States: goldilocks / reflation
China: overheating / late-cycle
Euro area: goldilocks / reflation
Japan: stall-speed, at target

month aggregated actuals

United States

Indicator	Basis	2013-12	2013-11	Change
Core CPI	% MoM	0.17 2013-12-01	0.19 2013-11-01	→ -0.02
Core PCE	% YoY	1.55 2013-12-01	1.51 2013-11-01	→ 0.04
CPI (YoY)	% YoY	1.51 2013-12-01	1.23 2013-11-01	▲ 0.28
FX vs USD	px	not recorded
GDP	% QoQ ann.	not recorded
PMI (mfg)	index	57.3 2013-12-02	56.4 2013-11-01	▲ 0.9
PMI (svc)	index	53.9 2013-12-04	55.4 2013-11-05	▼ -1.5
Policy rate	%	0.25 2013-12-31	0.25 2013-11-30	→ 0
2s10s slope	pp	2.66 2013-12-31	2.47 2013-11-29	▲ 0.19
Unemployment	%	6.7 2013-12-01	6.9 2013-11-01	▼ -0.2
10Y yield	%	3.04 2013-12-31	2.75 2013-11-29	▲ 0.29
2Y yield	%	0.38 2013-12-31	0.28 2013-11-29	▲ 0.1

China

Indicator	Basis	2013-12	2013-11	Change
CPI (YoY)	% YoY	3 2013-12-09	3.2 2013-11-09	▼ -0.2
FX vs USD	px	not recorded
GDP	% YoY	not recorded
PMI (mfg)	index	51 2013-12-01	51.4 2013-11-01	▼ -0.4
PMI (svc)	index	56 2013-12-03	56.3 2013-11-03	→ -0.3
Policy rate	% (1Y LPR)	5.73 2013-12-31	5.73 2013-11-29	→ 0
2s10s slope	pp	0.21 2013-12-31	0.2 2013-11-29	→ 0.02
Unemployment	%	not recorded
10Y yield	%	4.55 2013-12-31	4.36 2013-11-29	▲ 0.19
2Y yield	%	4.34 2013-12-31	4.17 2013-11-29	▲ 0.17

Euro area

Indicator	Basis	2013-12	2013-11	Change
CPI (YoY)	% YoY	0.9 2013-12-17	0.9 2013-11-29	→ 0
FX vs USD	px	not recorded
GDP	% YoY	-0.1 2013-12-17	-0.1 2013-11-15	→ 0
PMI (mfg)	index	52.7 2013-12-16	51.5 2013-11-21	▲ 1.2
PMI (svc)	index	51 2013-12-16	50.9 2013-11-21	→ 0.1
Policy rate	%	0.25 2013-12-05	0.25 2013-11-07	→ 0
Unemployment	%	not recorded
10Y yield	%	3.31 2013-12-01	3.17 2013-11-01	▲ 0.14

Japan

Indicator	Basis	2013-12	2013-11	Change
Core CPI	% YoY	0.6 2013-12-26	0.3 2013-11-25	▲ 0.3
CPI (YoY)	% YoY	1.5 2013-12-26	1.1 2013-11-25	▲ 0.4
FX vs USD	px	not recorded
GDP	% YoY	not recorded
PMI (mfg)		not recorded
Policy rate	%	0.1 2013-12-20	0.1 2013-11-21	→ 0
Unemployment	%	3.9 2013-12-30	4 2013-11-29	→ -0.1
10Y yield	%	0.69 2013-12-01	0.6 2013-11-01	▲ 0.08

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.

● 1 active

China

overheating / late-cycle

stall · 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.

○ no change

Euro area ⚠ stale

disinflationary stall

stall · below target · on hold

Sub-trend growth with low, easing inflation. Duration and quality tend to lead; cyclicals lag until growth re-accelerates. Policy easing is the usual circuit-breaker.

● 1 active

Japan ⚠ stale

disinflationary stall

unknown · below target · on hold

Sub-trend growth with low, easing inflation. Duration and quality tend to lead; cyclicals lag until growth re-accelerates. Policy easing is the usual circuit-breaker.

● 1 active

Mechanisms & channelsL2

United States

M5Growth acceleration (expansionary PMI)

Trigger: pmi_mfg: 56.4 → 57.3 (+0.9)

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).

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.

China

No active mechanism this week — the standing read above carries the bloc.

What would change the read

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.
Monetary tightening (rate hike) The policy rate is steady, so the tightening channel is dormant. A hike would fire it — watch it because it hits long-duration growth, long bonds, and gold first.
Growth acceleration (expansionary PMI) Manufacturing isn't both expanding and accelerating, so the growth-acceleration channel is dormant. A rising PMI back above 50 would fire it — it matters because it's the signal to rotate from defensives toward cyclicals.

Euro area

M9Long-end yield spike / term-premium rise

Trigger: yield_10y: 3.17118 → 3.31292 (+0.141735)

⚠ Fired on a stale print: yield_10y as of 2013-12-01 (14d 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 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).

What would change the read

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.
Monetary tightening (rate hike) The policy rate is steady, so the tightening channel is dormant. A hike would fire it — watch it because it hits long-duration growth, long bonds, and gold first.
Growth acceleration (expansionary PMI) Manufacturing isn't both expanding and accelerating, so the growth-acceleration channel is dormant. A rising PMI back above 50 would fire it — it matters because it's the signal to rotate from defensives toward cyclicals.

Japan

M1Inflation surprise (upside)

Trigger: core_cpi: 0 → 0.3 (+0.3)

Core inflation comes in higher than the prior reading.
Why: Core strips out food and energy, so a move in it signals persistent, broad price pressure rather than a one-off in volatile items — the kind a central bank reacts to.
The market reprices the policy-rate path higher.
Why: If inflation is stickier than thought, the central bank must keep rates higher for longer to cool it; traders bake that expectation into the whole rate curve immediately, before any actual hike.
Real yields rise, not just nominal yieldsnominal yield — The headline interest rate on a bond, before subtracting inflation..
Why: The inflation is already in the print, so the jump in nominal yields isn't just compensating for higher inflation — it's a genuine rise in the inflation-adjusted return demanded by lenders.
A higher real yield is a higher discount rate on future cash flows.
Why: Money earned years from now is discounted back to today at the real rate; when that rate rises, distant cash flows shrink in present-value terms more than near ones.
Long-duration growth equities de-rate hardest; banks and value hold up; the currency firms.
Why: Growth stocks are valued mostly on far-future profits, so a higher discount rate hits them most. Banks earn more as rates rise (wider margins), and value/cyclical earnings sit nearer in time. Higher local rates also pull in foreign capital, lifting the currency.

Helps
financialsvalueUSDshort-duration bonds

Hurts
long-duration growth equitieslong-dated government bondsgold (in real terms)

Caveat: Misfires if the print is read as one-off/transitory, or if growth is simultaneously rolling over (a stagflation mix), where cyclicals don't get the usual lift.

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

What would change the read

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.
Monetary tightening (rate hike) The policy rate is steady, so the tightening channel is dormant. A hike would fire it — watch it because it hits long-duration growth, long bonds, and gold first.

The dataL3

United States

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.20	1.51	-0.31 ▼	2013-12-15
Core CPI	0.17	0.10	+0.07 ▬	2013-12-01
Core PCE	1.55	1.51	+0.04 ▬	2013-12-01
Policy rate	0.25	0.25	+0.00 ▬	2013-12-15
GDP	3.60	2.80	+0.80 ▲	2013-12-05
PMI (mfg)	57.30	56.40	+0.90 ▲	2013-12-02
PMI (svc)	53.90	55.40	-1.50 ▼	2013-12-04
Unemployment	7.00	6.70	+0.30 ▲	2013-12-06
10Y yield	2.88	2.89	-0.01 ▬	2013-12-13
2Y yield	0.34	0.34	+0.00 ▬	2013-12-13
2s10s slope	2.54	2.55	-0.01 ▬	2013-12-13
FX vs USD	n/a

China

Indicator	Current	Prior	Δ	As of
CPI (YoY)	3.00	3.20	-0.20 ▼	2013-12-09
Policy rate	5.73	5.73	+0.00 ▬	2013-12-13
GDP	7.80	7.50	+0.30 ▲	2013-10-18
PMI (mfg)	51.00	51.40	-0.40 ▼	2013-12-01
PMI (svc)	56.00	56.30	-0.30 ▬	2013-12-03
Unemployment	n/a
10Y yield	4.54	4.59	-0.05 ▼	2013-12-13
2Y yield	4.31	4.36	-0.05 ▼	2013-12-13
2s10s slope	0.23	0.23	+0.00 ▬	2013-12-13
FX vs USD	n/a

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	0.90	0.70	+0.20 ▲	2013-11-29
Policy rate	0.25	0.25	+0.00 ▬	2013-12-05
GDP	-0.10	0.50	-0.60 ▼	2013-11-15
PMI (mfg)	51.60	51.50	+0.10 ▬	2013-12-02
PMI (svc)	51.20	50.90	+0.30 ▲	2013-12-04
Unemployment	12.10	12.20	-0.10 ▬	2013-11-29
10Y yield	3.31	3.17	+0.14 ▲	2013-12-01 ⚠
FX vs USD	n/a

Japan

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.10	1.10	+0.00 ▬	2013-11-25
Core CPI	0.30	0.00	+0.30 ▲	2013-11-25
Policy rate	0.10	0.10	+0.00 ▬	2013-11-21
GDP	n/a
PMI (mfg)	n/a
Unemployment	4.00	4.00	+0.00 ▬	2013-11-29
10Y yield	0.69	0.60	+0.08 ▲	2013-12-01 ⚠
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.