“Enjoy the party but stay close to the door”

The market is celebrating relatively resilient growth and lower-than-expected inflation globally (India CPI 5.72% or 18bps miss, Spain CPI 5.7% YoY or 10bps miss, US 6.5% and 5.7% as expected for headline and core but MoM headline below expectations at -0.1%).

The “celebration” translated into a flatter US Treasury curve, pricing a 50bps hike in H1 2023 followed by rate cuts in the next 18 months. The market “losers” of 2022 recovered some shine last week: US Tech gained + 5%, the Korean Kospi +5%; within US Tech the crypto-correlated semi stock Nvidia was up +13%, and the stock Mercado Libre +24%. Meanwhile, the US dollar weakness persisted, with JPY up +3.2%, EUR +1.8%, and AUD +...