Macro Intelligence · Weekly · deep read

Macro Regime — 2015-W50

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US · China · EU · Japan · mechanism-first, taught

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↩ Home Macro index ← 2015-12 board

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

Standing macro backdropBORROWED

Borrowed from its month (2015-12); the weekly reads the standing object, it does not recompute the aggregate.

United States: disinflationary stall
China: stall-speed, at target
Euro area: goldilocks / reflation
Japan: deflation watch

month aggregated actuals

United States

Indicator	Basis	2015-12	2015-11	Change
Core CPI	% MoM	0.13 2015-12-01	0.19 2015-11-01	→ -0.06
Core PCE	% YoY	1.19 2015-12-01	1.2 2015-11-01	→ -0.01
CPI (YoY)	% YoY	0.64 2015-12-01	0.44 2015-11-01	▲ 0.2
FX vs USD	px	not recorded
GDP	% QoQ ann.	not recorded
PMI (mfg)	index	48.6 2015-12-01	50.1 2015-11-02	▼ -1.5
PMI (svc)	index	55.9 2015-12-03	59.1 2015-11-04	▼ -3.2
Policy rate	%	0.5 2015-12-31	0.25 2015-11-30	▲ 0.25
2s10s slope	pp	1.21 2015-12-31	1.27 2015-11-30	▼ -0.06
Unemployment	%	5 2015-12-01	5.1 2015-11-01	→ -0.1
10Y yield	%	2.27 2015-12-31	2.21 2015-11-30	▲ 0.06
2Y yield	%	1.06 2015-12-31	0.94 2015-11-30	▲ 0.12

China

Indicator	Basis	2015-12	2015-11	Change
CPI (YoY)	% YoY	1.5 2015-12-09	1.3 2015-11-10	▲ 0.2
FX vs USD	px	not recorded
GDP	% YoY	not recorded
PMI (mfg)	index	49.7 2015-12-01	49.6 2015-11-01	→ 0.1
PMI (svc)	index	53.6 2015-12-01	53.1 2015-11-01	▲ 0.5
Policy rate	% (1Y LPR)	4.3 2015-12-31	4.3 2015-11-30	→ 0
2s10s slope	pp	0.4 2015-12-31	0.33 2015-11-30	▲ 0.07
Unemployment	%	not recorded
10Y yield	%	2.82 2015-12-31	3.04 2015-11-30	▼ -0.22
2Y yield	%	2.42 2015-12-31	2.71 2015-11-30	▼ -0.29

Euro area

Indicator	Basis	2015-12	2015-11	Change
CPI (YoY)	% YoY	0.2 2015-12-16	0.1 2015-11-16	→ 0.1
FX vs USD	px	not recorded
GDP	% YoY	-0.1 2015-12-16	0.1 2015-11-16	→ -0.2
PMI (mfg)	index	53.1 2015-12-16	52.8 2015-11-23	→ 0.3
PMI (svc)	index	53.9 2015-12-16	54.6 2015-11-23	▼ -0.7
Policy rate	%	0.05 2015-12-03	—	—
Unemployment	%	10.7 2015-12-01	—	—
10Y yield	%	1.19 2015-12-01	1.15 2015-11-01	→ 0.04

Japan

Indicator	Basis	2015-12	2015-11	Change
Core CPI	% YoY	0.9 2015-12-25	0.7 2015-11-27	▲ 0.2
CPI (YoY)	% YoY	0.3 2015-12-25	0.3 2015-11-27	→ 0
FX vs USD	px	not recorded
GDP	% YoY	not recorded
PMI (mfg)		not recorded
Policy rate	%	0.1 2015-12-18	0.1 2015-11-19	→ 0
Unemployment	%	3.3 2015-12-25	3.1 2015-11-27	▲ 0.2
10Y yield	%	0.27 2015-12-01	0.3 2015-11-01	→ -0.03

ThesisL0

(historical week — no Claude narration run)

Standing pictureL1

United States

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

China

stall-speed, at target

stall · at target · on hold

Growth hovering near flat with inflation roughly at target. A balanced, low-conviction regime — direction depends on which way growth breaks next; watch PMI for the tell.

○ no change

Euro area ⚠ stale

goldilocks / reflation

expansion · deflation risk · 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.

○ no change

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

M6Growth slowdown (deepening contraction)

Trigger: pmi_mfg: 50.1 → 48.6 (-1.5)

Manufacturing PMIPMI — Purchasing Managers' Index. Above 50 = the sector is expanding vs last month; below 50 = contracting. A timely read on activity. is below 50 and still falling.
Why: Below 50 means more firms are contracting than expanding; *falling* means the contraction is deepening, not bottoming — that combination is what leads earnings revisions down.
Investors rotate toward defensivesdefensives — Sectors whose demand is steady through the cycle — consumer staples, utilities, healthcare. They outperform when growth slows. and government bonds.
Why: When growth is deteriorating, steady-demand sectors (staples, utilities, healthcare) hold earnings better, and government bonds act as a hedge that rallies if the slowdown deepens further.
Cyclicalscyclicals — Sectors whose earnings rise and fall with the economic cycle — industrials, materials, energy, consumer discretionary., small-caps, EM and industrial commodities underperform.
Why: These are geared to the physical cycle and to leverage, so worsening activity hits their earnings and risk appetite hardest; commodity demand softens with industrial output.

Helps
defensive sectors (staples, utilities, healthcare)long government bondsquality/large-cap

Hurts
cyclicalssmall-capsEM equityindustrial commodities

Caveat: A shallow dip just below 50 that quickly reverses ('soft patch') doesn't trigger the full defensive rotation; the level must persist.

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

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.

Japan

M2Inflation surprise (downside / disinflation)

Trigger: core_cpi: 0.9 → 0.7 (-0.2)

Core inflation falls more than the prior reading.
Why: A faster-than-expected cooling in the persistent part of inflation tells the market the central bank has more room to ease.
The market prices an earlier or deeper easing path.
Why: Lower inflation removes the reason to keep rates high, so traders pull forward expected cuts into the curve.
Real yieldsreal yield — The yield after subtracting expected inflation — what a lender actually earns in purchasing power. Real yield ≈ nominal yield − expected inflation. fall.
Why: The expected policy ratepolicy 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. drops while inflation expectations stay anchored, so the inflation-adjusted return demanded by lenders declines.
A lower 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. re-rates long-duration assets upward; long bonds rally.
Why: Future cash flows are now discounted less harshly, lifting growth equities most; bond prices rise mechanically as their yields fall.

Helps
long-duration growth equitieslong-dated government bondsgoldrate-sensitive sectors (utilities, REITs)

Hurts
USD (vs easing-laggard peers)bank net-interest margins

Caveat: Misfires if disinflation is driven by demand collapse rather than supply normalization — then the growth scare dominates and risk assets fall despite lower yields.

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.
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)	0.64	0.20	+0.44 ▲	2015-12-01
Core CPI	0.13	0.20	-0.07 ▬	2015-12-01
Core PCE	1.19	1.30	-0.11 ▼	2015-12-01
Policy rate	0.25	0.25	+0.00 ▬	2015-12-13
GDP	2.10	1.50	+0.60 ▲	2015-11-24
PMI (mfg)	48.60	50.10	-1.50 ▼	2015-12-01
PMI (svc)	55.90	59.10	-3.20 ▼	2015-12-03
Unemployment	5.00	5.00	+0.00 ▬	2015-12-04
10Y yield	2.13	2.24	-0.11 ▼	2015-12-11
2Y yield	0.88	0.95	-0.07 ▼	2015-12-11
2s10s slope	1.25	1.29	-0.04 ▬	2015-12-11
FX vs USD	n/a

China

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.50	1.30	+0.20 ▲	2015-12-09
Policy rate	4.30	4.30	+0.00 ▬	2015-12-11
GDP	6.90	7.00	-0.10 ▬	2015-10-19
PMI (mfg)	49.70	49.60	+0.10 ▬	2015-12-01
PMI (svc)	53.60	53.10	+0.50 ▲	2015-12-01
Unemployment	n/a
10Y yield	2.99	3.00	-0.01 ▬	2015-12-11
2Y yield	2.59	2.60	-0.01 ▬	2015-12-11
2s10s slope	0.41	0.40	+0.00 ▬	2015-12-11
FX vs USD	n/a

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	0.10	0.10	+0.00 ▬	2015-12-02
Policy rate	0.05	0.05	+0.00 ▬	2015-12-03
GDP	0.10	0.20	-0.10 ▬	2015-11-16
PMI (mfg)	52.80	52.80	+0.00 ▬	2015-12-01
PMI (svc)	54.20	54.60	-0.40 ▼	2015-12-03
Unemployment	10.70	10.80	-0.10 ▼	2015-12-01
10Y yield	1.19	1.15	+0.04 ▬	2015-12-01 ⚠
FX vs USD	n/a

Japan

Indicator	Current	Prior	Δ	As of
CPI (YoY)	0.30	0.00	+0.30 ▲	2015-11-27
Core CPI	0.70	0.90	-0.20 ▼	2015-11-27
Policy rate	0.10	0.10	+0.00 ▬	2015-11-19
GDP	n/a
PMI (mfg)	n/a
Unemployment	3.10	3.40	-0.30 ▼	2015-11-27
10Y yield	0.27	0.30	-0.03 ▬	2015-12-01 ⚠
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.