⚠️ Markets are pricing in the most aggressive front-loaded Fed hiking cycle in modern history. If the Fed delivers 4 consecutive 50bps hikes starting in May... which is starting to get priced in... then this will be more aggressive than what we saw in '94. History being made $USD

⚠️ Stuff from Jan US PPI that matters from PCE all looks a bit benign/soft. Might see calls for core PCE nudged lower (after going higher post-CPI yday) $USD

⚠️ US CPI was hot... but the January effect wasn't as hot as prior years. One measure, the number of components running >2.5% annualised inflation (Waller Rule), came in at 52%. This was softer than the last 3 January's ('22-'24). Silver lining for a Fed trying not to hike $USD

*BOE'S MANN: OPTED FOR HALF-POINT CUT TO `CUT THROUGH THE NOISE' What's the Bank of England's optimal target level for 'noise'? Must have missed that in the remit 🤓 $GBP

⚠️ Latest BoE DMP survey wasn't pretty reading... especially on the employment growth side. Jan saw the first negative reading for realised employment (ie, firms reporting job cuts) since the Covid crisis. Wages and inflation also drifting down & right. BoE will keep cutting $GBP

TL;DR Mann wanted to cut 50bps to stop the gilt sell-off

⚠️ BoE cuts 25bps! But the big shock has to be Catherine Mann (a prior hawk) voting for a 50bps cut! Some pivot given some thought she'd vote to hold rates today. Opens the door to front-loaded cuts if the data permits. Everything else all expected (careful approach to cuts) $GBP

China right now… $USD

Tariffs aren't real until Fabrizio Romano says 'HERE WE GO' #TariffDeadlineDay

Episode 3 of the Trade Wars franchise: Trade War 1: The Tariff Menace [2017/18] Trade War 2: Attack of Chinese Trade [2019] Trade War 3: Revenge of the Tariff Man [2025] Trade War 4: A New Trade Deal Trade War 5: Trade Partners Strike Back Trade War 6: Return of the Mercantilist

*NVIDIA CEO WILL MEET WITH TRUMP TODAY The most important man for equity markets meeting with Donald Trump today 🤓

Jan FOMC summary $USD

The definition of “making an example out of”… don’t mess with Tariff Man $USD

@Gregoryboggis Revisions wouldn’t change the 6M or 12M sum/interpretation of the data

⚠️ Softer-than-consensus US CPI enough to put a lid on the bond sell-off for now. But the breadth of inflation is still worrying (51% of basket running above 2.5% annualised inflation). This is likely to increase in Jan given start of year price hikes across the basket $USD

⚠️ A well-behaved UK CPI that gives the green light for BoE to cut rates. Under the hood things are normalising especially services. Not just airfares. But hotel prices, package holidays & insurance easing. Should be pricing at least 4 BoE cuts in '25. $GBP to follow rates lower

⚠️ Post-Trump spike in NFIB survey was no fluke. Optimism amongst US small businesses spiked again in Dec to cycle highs (similar levels to what we saw in Dec 2016). Trumpian animal spirits look to be genuine (next comes more hiring & then higher wages/prices) $USD

⚠️ Bid-ask spreads for gilts don't point to an LDI-like crisis for now. Spreads widened yesterday but (1) not unusually large like Oct '22; (2) focused on 30Y more; (3) no sustained selling. Feels like stopouts/technical flows around key levels in a thin market vs. systemic $GBP

⚠️ One of the biggest red flags in macro markets - and a sign of fiscal un-anchoring - is yields up and currency down. This is happening again in the UK (the last proper time we saw this was Q4 '22... after *that* Budget). Looks ominous $GBP

⚠️ Worrying thing about the ISM services price component is the dynamics under the hood are echoing what we saw in 2021/22: Firms reporting higher prices paid increasing (white line) whilst firms reporting lower prices falling to cycle lows (blue line). Something to 👀 in Q1 $USD