Investors are buoyed by the fanfare of trumpets around China’s golden week, where holiday tourism and travel data pointed to a solid recovery in the hospitality sector, adding conviction to bullish reopening trade.

But hold the applause; the strength of the economic recovery in other sectors appears too early to tell, as traffic congestion and subway ridership data were mixed, new home sales still showed double-digit contraction, suggesting investors are not moving to the beat of growth impulses just yet.


The market pricing reflects a probability-weighted average of less hawkish FOMC outcomes, and forward curves should be inverted to some extent given the asymmetric forward outlook—after all, rapidly cooling inflation means scenarios with lower policy rates are more likely than scenarios with much higher policy rates. And while we do not think the risk is in the ” inversion” itself, the Fed might get uncomfortable with the nearness and the extent of the inversion at this cycle stage.

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT