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Macro Regime — 2024-W45

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↩ Home Macro index ← 2024-11 board

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

Standing macro backdropBORROWED

Borrowed from its month (2024-11); the weekly reads the standing object, it does not recompute the aggregate.

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

month aggregated actuals

United States

Indicator	Basis	2024-11	2024-10	Change
Core CPI	% MoM	0.29 2024-11-01	0.31 2024-10-01	→ -0.02
Core PCE	% YoY	2.98 2024-11-01	2.99 2024-10-01	→ -0.01
CPI (YoY)	% YoY	2.72 2024-11-01	2.58 2024-10-01	▲ 0.14
FX vs USD	px	105.74 2024-11-29	103.98 2024-10-31	▲ 1.76
GDP	% QoQ ann.	not recorded
PMI (mfg)	index	46.5 2024-11-01	47.2 2024-10-01	▼ -0.7
PMI (svc)	index	56 2024-11-05	54.9 2024-10-03	▲ 1.1
Policy rate	%	4.75 2024-11-30	5 2024-10-31	▼ -0.25
2s10s slope	pp	0.05 2024-11-29	0.12 2024-10-31	▼ -0.07
Unemployment	%	4.2 2024-11-01	4.1 2024-10-01	→ 0.1
10Y yield	%	4.18 2024-11-29	4.28 2024-10-31	▼ -0.1
2Y yield	%	4.13 2024-11-29	4.16 2024-10-31	→ -0.03

China

Indicator	Basis	2024-11	2024-10	Change
CPI (YoY)	% YoY	0.3 2024-11-09	0.4 2024-10-13	→ -0.1
FX vs USD	px	7.24 2024-11-29	7.11 2024-10-31	→ 0.13
GDP	% YoY	not recorded
PMI (mfg)	index	50.3 2024-11-01	50.1 2024-10-01	→ 0.2
PMI (svc)	index	50 2024-11-30	50.2 2024-10-31	→ -0.2
Policy rate	% (1Y LPR)	3.1 2024-11-20	3.1 2024-10-21	→ 0
2s10s slope	pp	0.65 2024-11-29	0.7 2024-10-31	→ -0.05
Unemployment	%	5 2024-11-01	5 2024-10-01	→ 0
10Y yield	%	2.02 2024-11-29	2.15 2024-10-31	▼ -0.13
2Y yield	%	1.37 2024-11-29	1.45 2024-10-31	▼ -0.08

Euro area

Indicator	Basis	2024-11	2024-10	Change
CPI (YoY)	% YoY	2.3 2024-11-29	2 2024-10-31	▲ 0.3
FX vs USD	px	1.06 2024-11-29	1.09 2024-10-31	→ -0.03
GDP	% YoY	-0.3 2024-11-29	0.3 2024-10-31	▼ -0.6
PMI (mfg)	index	45.2 2024-11-22	45.9 2024-10-24	▼ -0.7
PMI (svc)	index	49.2 2024-11-22	51.2 2024-10-24	▼ -2
Policy rate	%	not recorded
Unemployment	%	not recorded
10Y yield	%	2.93 2024-11-01	2.87 2024-10-01	▲ 0.06

Japan

Indicator	Basis	2024-11	2024-10	Change
Core CPI	% YoY	1.6 2024-11-22	1.7 2024-10-18	→ -0.1
CPI (YoY)	% YoY	2.3 2024-11-22	2.5 2024-10-18	▼ -0.2
FX vs USD	px	151.17 2024-11-29	153.2 2024-10-31	▼ -2.03
GDP	% YoY	not recorded
PMI (mfg)		not recorded
Policy rate	%	not recorded
Unemployment	%	2.5 2024-11-29	2.4 2024-10-29	→ 0.1
10Y yield	%	1.05 2024-11-01	0.94 2024-10-01	▲ 0.12

ThesisL0

(historical week — no Claude narration run)

Standing pictureL1

United States

stagflationary

contraction · above target · on hold

Contracting activity *and* above-target inflation — the hardest mix: the central bank can't ease freely. Real assets, energy and value tend to hold up better than long-duration growth and bonds.

● 1 active

China

deflation watch

stall · deflation risk · easing

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.

● 2 active

Euro area ⚠ stale

disinflationary stall

contraction · at target · easing

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

stall-speed, at target

unknown · 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.

● 1 active

Mechanisms & channelsL2

United States

M6Growth slowdown (deepening contraction)

Trigger: pmi_mfg: 47.2 → 46.5 (-0.7)

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

M3Monetary easing (rate cut)

Trigger: policy_rate: 3.35 → 3.1 (-0.25)

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: 3.35 → 3.1 (-0.25)

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 cyclicals, 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

M3Monetary easing (rate cut)

Trigger: policy_rate: 3.65 → 3.4 (-0.25)

The central bank cuts its policy rate.
Why: The policy rate anchors the entire rate structure, so a cut lowers the risk-free baseline against which every asset is valued.
Discount rates 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).

What would change the read

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.
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).

Japan

M9Long-end yield spike / term-premium rise

Trigger: yield_10y: 0.935 → 1.05 (+0.115)

⚠ Fired on a stale print: yield_10y as of 2024-11-01 (9d 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

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)	2.72	2.40	+0.32 ▲	2024-11-01
Core CPI	0.29	0.30	-0.01 ▬	2024-11-01
Core PCE	2.98	2.70	+0.28 ▲	2024-11-01
Policy rate	4.75	4.75	+0.00 ▬	2024-11-10
GDP	2.80	1.90	+0.90 ▲	2024-10-30
PMI (mfg)	46.50	47.20	-0.70 ▼	2024-11-01
PMI (svc)	56.00	54.90	+1.10 ▲	2024-11-05
Unemployment	4.20	4.10	+0.10 ▲	2024-11-01
10Y yield	4.30	4.31	-0.01 ▬	2024-11-08
2Y yield	4.26	4.21	+0.05 ▬	2024-11-08
2s10s slope	0.04	0.10	-0.06 ▼	2024-11-08
FX vs USD	105.00	104.51	+0.49 ▬	2024-11-08

China

Indicator	Current	Prior	Δ	As of
CPI (YoY)	0.30	0.40	-0.10 ▼	2024-11-09
Policy rate	3.10	3.35	-0.25 ▼	2024-10-21
GDP	4.60	4.70	-0.10 ▬	2024-10-18
PMI (mfg)	50.30	50.10	+0.20 ▬	2024-11-01
PMI (svc)	50.20	50.00	+0.20 ▬	2024-10-31
Unemployment	5.00	5.00	+0.00 ▬	2024-11-01
10Y yield	2.11	2.11	-0.00 ▬	2024-11-08
2Y yield	1.42	1.42	-0.01 ▬	2024-11-08
2s10s slope	0.69	0.69	+0.00 ▬	2024-11-08
FX vs USD	7.14	7.18	-0.04 ▬	2024-11-08

Euro area

Indicator	Current	Prior	Δ	As of
CPI (YoY)	2.00	1.70	+0.30 ▲	2024-10-31
Policy rate	3.40	3.65	-0.25 ▼	2024-10-17
GDP	0.30	-0.10	+0.40 ▲	2024-10-31
PMI (mfg)	46.00	45.90	+0.10 ▬	2024-11-04
PMI (svc)	51.60	51.20	+0.40 ▲	2024-11-06
Unemployment	6.30	6.40	-0.10 ▼	2024-10-31
10Y yield	2.93	2.87	+0.06 ▲	2024-11-01 ⚠
FX vs USD	1.08	1.07	+0.01 ▬	2024-11-08

Japan

Indicator	Current	Prior	Δ	As of
CPI (YoY)	2.50	3.00	-0.50 ▼	2024-10-18
Core CPI	1.70	1.70	+0.00 ▬	2024-10-18
Policy rate	0.25	0.25	+0.00 ▬	2024-10-31
GDP	n/a
PMI (mfg)	n/a
Unemployment	2.40	2.50	-0.10 ▼	2024-10-29
10Y yield	1.05	0.94	+0.12 ▲	2024-11-01 ⚠
FX vs USD	153.18	154.32	-1.14 ▼	2024-11-08

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.