Macro Intelligence · Weekly · deep read

Macro Regime — 2022-W03

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

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↩ Home Macro index ← 2022-01 board

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

Standing macro backdropBORROWED

Borrowed from its month (2022-01); the weekly reads the standing object, it does not recompute the aggregate.

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

month aggregated actuals

United States

Indicator	Basis	2022-01	2021-12	Change
Core CPI	% MoM	0.55 2022-01-01	0.63 2021-12-01	→ -0.08
Core PCE	% YoY	5.36 2022-01-01	5.21 2021-12-01	▲ 0.15
CPI (YoY)	% YoY	7.56 2022-01-01	7.17 2021-12-01	▲ 0.39
FX vs USD	px	96.54 2022-01-31	95.67 2021-12-31	▲ 0.87
GDP	% QoQ ann.	-1 2022-01-01	—	—
PMI (mfg)	index	58.7 2022-01-04	61.1 2021-12-01	▼ -2.4
PMI (svc)	index	62 2022-01-06	69.1 2021-12-03	▼ -7.1
Policy rate	%	0.25 2022-01-31	0.25 2021-12-31	→ 0
2s10s slope	pp	0.61 2022-01-31	0.79 2021-12-31	▼ -0.18
Unemployment	%	4 2022-01-01	3.9 2021-12-01	→ 0.1
10Y yield	%	1.79 2022-01-31	1.52 2021-12-31	▲ 0.27
2Y yield	%	1.18 2022-01-31	0.73 2021-12-31	▲ 0.45

China

Indicator	Basis	2022-01	2021-12	Change
CPI (YoY)	% YoY	1.5 2022-01-12	2.3 2021-12-09	▼ -0.8
FX vs USD	px	6.35 2022-01-31	6.37 2021-12-31	→ -0.02
GDP	% YoY	4 2022-01-17	—	—
PMI (mfg)	index	50.1 2022-01-01	50.3 2021-12-01	→ -0.2
PMI (svc)	index	51.1 2022-01-30	52.7 2021-12-31	▼ -1.6
Policy rate	% (1Y LPR)	3.7 2022-01-20	3.8 2021-12-20	▼ -0.1
2s10s slope	pp	0.57 2022-01-30	0.4 2021-12-31	▲ 0.16
Unemployment	%	5.3 2022-01-01	5.1 2021-12-01	▲ 0.2
10Y yield	%	2.7 2022-01-30	2.78 2021-12-31	▼ -0.08
2Y yield	%	2.13 2022-01-30	2.37 2021-12-31	▼ -0.24

Euro area

Indicator	Basis	2022-01	2021-12	Change
CPI (YoY)	% YoY	5 2022-01-20	4.9 2021-12-17	→ 0.1
FX vs USD	px	1.12 2022-01-31	1.13 2021-12-31	→ -0.02
GDP	% YoY	0.4 2022-01-20	0.4 2021-12-17	→ 0
PMI (mfg)	index	59 2022-01-24	58 2021-12-16	▲ 1
PMI (svc)	index	51.2 2022-01-24	53.3 2021-12-16	▼ -2.1
Policy rate	%	not recorded
Unemployment	%	7.2 2022-01-10	7.3 2021-12-02	→ -0.1
10Y yield	%	0.53 2022-01-01	0.28 2021-12-01	▲ 0.26

Japan

Indicator	Basis	2022-01	2021-12	Change
Core CPI	% YoY	-1.3 2022-01-21	-1.2 2021-12-24	→ -0.1
CPI (YoY)	% YoY	0.8 2022-01-21	0.6 2021-12-24	▲ 0.2
FX vs USD	px	115.26 2022-01-31	115.06 2021-12-31	→ 0.2
GDP	% YoY	-0.58 2022-01-01	—	—
PMI (mfg)		not recorded
Policy rate	%	-0.1 2022-01-18	-0.1 2021-12-17	→ 0
Unemployment	%	not recorded
10Y yield	%	0.17 2022-01-01	0.07 2021-12-01	▲ 0.1

ThesisL0

(historical week — no Claude narration run)

Standing pictureL1

United States

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.

○ no change

China

stall-speed, at target

stall · at target · easing

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.

● 2 active

Euro area ⚠ stale

overheating / late-cycle

expansion · above target · on hold

● 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

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

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

M3Monetary easing (rate cut)

Trigger: policy_rate: 3.8 → 3.7 (-0.1)

The central bank cuts its 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..
Why: The policy rate anchors the entire rate structure, so a cut lowers the risk-free baseline against which every asset is valued.
Discount ratesdiscount 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. fall across asset classes and liquidity expectations rise.
Why: A lower risk-free rate raises the present value of future cash flows everywhere, and a cut signals the bank will keep conditions loose.
Risk assets re-rate up; the currency softens.
Why: Cheaper money flows toward higher-returning assets, and a lower local rate narrows the yield advantage of holding the currency, so it weakens.
The weaker currency lifts exporters, commodities, gold, and EM.
Why: Commodities priced in the easing currency rise in that currency; exporters gain competitiveness; and EM borrowers with dollar debt benefit as the dollar softens.

Helps
equities (broadly)goldEM assetslong-duration bondscommodities

Hurts
the easing currencycash/money-market real yield

Caveat: If the cut is an emergency response to a fast-deteriorating outlook ('cutting into a recession'), equities can fall even as bonds rally — the growth signal outweighs the liquidity boost.

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

M11China credit impulse (easing proxy)

Trigger: policy_rate: 3.8 → 3.7 (-0.1)

China cuts its benchmark lending rate (LPR).
Why: A lower LPR reduces borrowing costs and is the most visible signal that policymakers want credit to flow — a proxy for a turn-up in the credit impulsecredit 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..
The flow of new credit into the economy turns up.
Why: Cheaper credit pulls forward borrowing by firms and local governments, raising the change in outstanding credit — the impulse — which leads activity by one to three quarters.
Industrial commodities, China/HK cyclicalscyclicals — Sectors whose earnings rise and fall with the economic cycle — industrials, materials, energy, consumer discretionary., and the EM/commodity-exporter complex benefit.
Why: China is the marginal buyer of many industrial commodities, so a credit-driven activity pickup lifts their prices and the equities and exporter currencies geared to that demand.

Helps
industrial commoditiesChina/HK cyclicalsEM equitycommodity exporters (AUD, BRL)

Hurts
CNY (on the rate cut)China government bond yields (fall)

Caveat: LPR is only a proxy; the true impulse needs total-social-financing / new-loan data (a Rung-2 addition). A cut without a pickup in actual credit demand ('pushing on a string') doesn't deliver the transmission.

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

Euro area

M9Long-end yield spike / term-premium rise

Trigger: yield_10y: 0.278432 → 0.534543 (+0.256111)

⚠ Fired on a stale print: yield_10y as of 2022-01-01 (22d 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 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

M9Long-end yield spike / term-premium rise

Trigger: yield_10y: 0.07 → 0.17 (+0.1)

⚠ Fired on a stale print: yield_10y as of 2022-01-01 (22d 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)	7.00	7.56	-0.56 ▼	2022-01-12
Core CPI	0.60	0.55	+0.05 ▬	2022-01-12
Core PCE	5.36	4.70	+0.66 ▲	2022-01-01
Policy rate	0.25	0.25	+0.00 ▬	2022-01-23
GDP	-1.00	2.30	-3.30 ▼	2022-01-01
PMI (mfg)	58.70	61.10	-2.40 ▼	2022-01-04
PMI (svc)	62.00	69.10	-7.10 ▼	2022-01-06
Unemployment	3.90	4.00	-0.10 ▼	2022-01-07
10Y yield	1.75	1.83	-0.08 ▼	2022-01-21
2Y yield	1.01	1.08	-0.07 ▼	2022-01-21
2s10s slope	0.74	0.75	-0.01 ▬	2022-01-21
FX vs USD	95.64	95.74	-0.10 ▬	2022-01-21

China

Indicator	Current	Prior	Δ	As of
CPI (YoY)	1.50	2.30	-0.80 ▼	2022-01-12
Policy rate	3.70	3.80	-0.10 ▼	2022-01-20
GDP	4.00	4.90	-0.90 ▼	2022-01-17
PMI (mfg)	50.10	50.30	-0.20 ▬	2022-01-01
PMI (svc)	52.70	52.30	+0.40 ▲	2021-12-31
Unemployment	5.30	5.10	+0.20 ▲	2022-01-01
10Y yield	2.71	2.73	-0.02 ▬	2022-01-21
2Y yield	2.15	2.21	-0.06 ▼	2022-01-21
2s10s slope	0.56	0.52	+0.04 ▬	2022-01-21
FX vs USD	6.34	6.34	-0.00 ▬	2022-01-21

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	5.00	5.00	+0.00 ▬	2022-01-20
Policy rate	0.00	0.00	+0.00 ▬	2021-12-16
GDP	0.40	0.40	+0.00 ▬	2022-01-20
PMI (mfg)	58.00	58.00	+0.00 ▬	2022-01-03
PMI (svc)	53.10	53.30	-0.20 ▬	2022-01-05
Unemployment	7.20	7.30	-0.10 ▬	2022-01-10
10Y yield	0.53	0.28	+0.26 ▲	2022-01-01 ⚠⚠
FX vs USD	1.13	1.13	-0.00 ▬	2022-01-21

Japan

Indicator	Current	Prior	Δ	As of
CPI (YoY)	0.80	0.60	+0.20 ▲	2022-01-21
Core CPI	-1.30	-1.20	-0.10 ▼	2022-01-21
Policy rate	-0.10	-0.10	+0.00 ▬	2022-01-18
GDP	n/a
PMI (mfg)	n/a
Unemployment	2.80	2.70	+0.10 ▬	2021-12-28
10Y yield	0.17	0.07	+0.10 ▲	2022-01-01 ⚠⚠
FX vs USD	113.99	114.35	-0.35 ▬	2022-01-21

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.