Macro Intelligence · Weekly · deep read

Macro Regime — 2022-W06

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↩ Home Macro index ← 2022-02 board

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

Standing macro backdropBORROWED

Borrowed from its month (2022-02); the weekly reads the standing object, it does not recompute the aggregate.

United States: overheating / late-cycle
China: disinflationary stall
Euro area: overheating / late-cycle
Japan: disinflationary stall

month aggregated actuals

United States

Indicator	Basis	2022-02	2022-01	Change
Core CPI	% MoM	0.53 2022-02-01	0.55 2022-01-01	→ -0.02
Core PCE	% YoY	5.6 2022-02-01	5.36 2022-01-01	▲ 0.24
CPI (YoY)	% YoY	7.94 2022-02-01	7.56 2022-01-01	▲ 0.38
FX vs USD	px	96.71 2022-02-28	96.54 2022-01-31	→ 0.17
GDP	% QoQ ann.	not recorded
PMI (mfg)	index	57.6 2022-02-01	58.7 2022-01-04	▼ -1.1
PMI (svc)	index	59.9 2022-02-03	62 2022-01-06	▼ -2.1
Policy rate	%	0.25 2022-02-28	0.25 2022-01-31	→ 0
2s10s slope	pp	0.39 2022-02-28	0.61 2022-01-31	▼ -0.22
Unemployment	%	3.9 2022-02-01	4 2022-01-01	→ -0.1
10Y yield	%	1.83 2022-02-28	1.79 2022-01-31	→ 0.04
2Y yield	%	1.44 2022-02-28	1.18 2022-01-31	▲ 0.26

China

Indicator	Basis	2022-02	2022-01	Change
CPI (YoY)	% YoY	0.9 2022-02-16	1.5 2022-01-12	▼ -0.6
FX vs USD	px	6.32 2022-02-28	6.35 2022-01-31	→ -0.04
GDP	% YoY	not recorded
PMI (mfg)	index	50.2 2022-02-01	50.1 2022-01-01	→ 0.1
PMI (svc)	index	not recorded
Policy rate	% (1Y LPR)	3.7 2022-02-21	3.7 2022-01-20	→ 0
2s10s slope	pp	0.52 2022-02-28	0.57 2022-01-30	→ -0.05
Unemployment	%	5.5 2022-02-01	5.3 2022-01-01	▲ 0.2
10Y yield	%	2.77 2022-02-28	2.7 2022-01-30	▲ 0.08
2Y yield	%	2.26 2022-02-28	2.13 2022-01-30	▲ 0.12

Euro area

Indicator	Basis	2022-02	2022-01	Change
CPI (YoY)	% YoY	5.1 2022-02-23	5 2022-01-20	→ 0.1
FX vs USD	px	1.12 2022-02-28	1.12 2022-01-31	→ 0
GDP	% YoY	0.3 2022-02-23	0.4 2022-01-20	→ -0.1
PMI (mfg)	index	58.4 2022-02-21	59 2022-01-24	▼ -0.6
PMI (svc)	index	55.8 2022-02-21	51.2 2022-01-24	▲ 4.6
Policy rate	%	0 2022-02-03	—	—
Unemployment	%	7 2022-02-01	7.2 2022-01-10	▼ -0.2
10Y yield	%	0.94 2022-02-01	0.53 2022-01-01	▲ 0.41

Japan

Indicator	Basis	2022-02	2022-01	Change
Core CPI	% YoY	-1.9 2022-02-18	-1.3 2022-01-21	▼ -0.6
CPI (YoY)	% YoY	0.5 2022-02-18	0.8 2022-01-21	▼ -0.3
FX vs USD	px	115.58 2022-02-28	115.26 2022-01-31	→ 0.32
GDP	% YoY	not recorded
PMI (mfg)		not recorded
Policy rate	%	not recorded
Unemployment	%	2.7 2022-02-01	—	—
10Y yield	%	0.18 2022-02-01	0.17 2022-01-01	→ 0.01

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.

○ no change

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: 0.534543 → 0.944138 (+0.409595)

⚠ Fired on a stale print: yield_10y as of 2022-02-01 (12d 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

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.

The dataL3

United States

Indicator	Current	Prior	Δ	As of
CPI (YoY)	7.50	7.94	-0.44 ▼	2022-02-10
Core CPI	0.60	0.53	+0.07 ▬	2022-02-10
Core PCE	5.60	4.90	+0.70 ▲	2022-02-01
Policy rate	0.25	0.25	+0.00 ▬	2022-02-13
GDP	6.90	-1.00	+7.90 ▲	2022-01-27
PMI (mfg)	57.60	58.70	-1.10 ▼	2022-02-01
PMI (svc)	59.90	62.00	-2.10 ▼	2022-02-03
Unemployment	4.00	3.90	+0.10 ▲	2022-02-04
10Y yield	1.92	2.03	-0.11 ▼	2022-02-11
2Y yield	1.50	1.61	-0.11 ▼	2022-02-11
2s10s slope	0.42	0.42	+0.00 ▬	2022-02-11
FX vs USD	96.08	95.55	+0.53 ▲	2022-02-11

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)	50.20	50.10	+0.10 ▬	2022-02-01
PMI (svc)	51.10	52.70	-1.60 ▼	2022-01-30
Unemployment	5.50	5.30	+0.20 ▲	2022-02-01
10Y yield	2.79	2.73	+0.06 ▲	2022-02-11
2Y yield	2.27	2.21	+0.06 ▲	2022-02-11
2s10s slope	0.52	0.53	-0.01 ▬	2022-02-11
FX vs USD	6.35	6.36	-0.01 ▬	2022-02-11

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	5.10	5.00	+0.10 ▬	2022-02-02
Policy rate	0.00	0.00	+0.00 ▬	2022-02-03
GDP	0.30	0.40	-0.10 ▬	2022-02-02
PMI (mfg)	58.70	59.00	-0.30 ▬	2022-02-01
PMI (svc)	51.10	51.20	-0.10 ▬	2022-02-03
Unemployment	7.00	7.20	-0.20 ▼	2022-02-01
10Y yield	0.94	0.53	+0.41 ▲	2022-02-01 ⚠
FX vs USD	1.14	1.14	-0.00 ▬	2022-02-11

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	2.70	2.80	-0.10 ▬	2022-02-01
10Y yield	0.18	0.17	+0.01 ▬	2022-02-01 ⚠
FX vs USD	116.05	115.60	+0.45 ▬	2022-02-11

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.