Summary: More confirmation China’s economy is accelerating to the downside. The country’s official services PMI slid below fifty to its lowest since Zero-COVID while manufacturing just set a record for the amount of time spent consecutively in contraction. And that’s only the beginning, as more is coming out among critical property developers like China Vanke. Beijing may have also changed up its priorities where it comes to the bankrupt real estate giants, too. Also, an update where US$ repo stands starting December.

Summary: It’s time for a rant on a topic that has bothered me for a very long time. It has forced its reappearance at a critical time, too. While it might not seem like a big deal at first, this goes straight to the heart of the biggest factors the economy and the world are wrestling with as we close out 2025. The background for this discussion is more confirmation of job shedding in the US economy. As a result, bills are all-in on next week’s rate cut.

Summary: This one takes things up several more notched. Not only does it have hedge fund redemptions, this is a well-known name and its actions taken in response to those requests is only going to make everything a lot worse. In these situations, everything comes down to trust. Instead, during the worst cases, that gets quickly eroded by a lack of information, and by reactions that become shadier and more questionable the more obvious the desperation. This one is up there on those counts.

Summary: Geopolitics violently reshaped the WTI futures curve right out of contango and into sharp backwardation again. While this is not uncommon, in this case it’s a bit volatile anyway. In spite of that, the WTI signal remains which is a much bigger fact than most people fear. The reason is the level of stupid that took place in the bubble credit period and why it did. There’s a lot more to it than the public might appreciate. One central banker already mentioned parallels to 2008, and this is the chief one made all the more relevant by more usage of the Fed’s repo, elevated SOFR, not to mention the likely imminent end of QT.

Summary: WTI futures quickly back into contango and recent developments in all three fundamental factors priced into the curve show why. It’s not just or even “a” supply glut. It is the combination of tight financing (more in Fed repo and SOFR today), lack of demand (confidence and holiday spending in the US) before finally oil supply (why Saudi Arabia “has” to produce now). Whatever might be left of the geopolitical premium in crude prices it is being overwhelmed by everything else. And that means a lot more than contango; in fact, it’s what contango means for everything else.

Summary: Monetary matters have force their way to the forefront, all because of payroll reports even as the next one remains delayed. Indicated eurodollar tightening has roared in several ways, starting with repo fails. Those don’t appear to be strictly quarter-end technical, either, with other indications strongly pointing toward risk aversion interrupting cash and collateral flows. In addition to payroll data, today the ISM’s service index also spotlights the likely macro suspect in everything. Shadow credit is not a fan of flat Beveridge.

Summary: Gold keeps flying pressing the copper-to-gold ratio down to more than just a new record low. This is getting utterly insane. Part of that may be bullion is overextending its run, though there are legit fundamental reasons for the price surge. China’s bank situation appears to be deteriorating rapidly along with prospects for an already-beleaguered Chinese economy. All the recent data points to a collision between short run downside acceleration and the culmination of a nearly two decade-long depressionary journey that has China on the cusp of its own flat Beveridge.

Summary: Rather than forecasting from here how bad macro and money conditions might become, Argentina is back in the mainstream spotlight because it is caught up squarely in the eurodollar’s crosshairs. But what does that actually mean? Not only will we begin to answer that question, we’ll provide another important one adjacent to it: why doesn’t anyone know about this? What you’ll see is that the answer to the former is more understandable than the one to the latter.

Summary: Gold is finally breaking out, soaring a huge percent today reaching a new all-time high well north of $3500. The reasons why leave it with more upside. Those have nothing whatsoever to do with inflation or a “crashing” dollar. Quite the opposite. From Treasury bill yields to term SOFR, on the macro side with ISM, construction and consumer spending on services, the evidence for a flat Beveridge keeps getting bigger and that is what’s propelling gold. The fact bullion is massively illiquid just makes an even more robust signal.

Summary: It isn’t just right, it’s significant. More and more Economists and their like are admitting consumers were right. Their dour “vibe” the past few years really had been right after all. This isn’t merely an academic exercise meant to relitigate the past, however. Instead, if Economists are throwing in the towel on the upside, the same might be true for employers and then the shift in thinking becomes more than just, well, sentiment.

Summary: Waffles are back on the US rates menu, but they don’t seem connected to the slight back up in Treasury note yields. Instead, bills keep plowing lower. Anyway, most people simply want to know how low rates might end up going. We have a few ways of sketching a rough outline, starting with swaps then applying another new record low in CtG. In the real economy, getting to really low future ST rates was always going to be about Beveridge, though maybe not the one right now you were thinking.

Summary: Spoiler: the Fed cut by 25 bps. And though the dots did drop, there was no clear signal from policymakers even as the economy itself grows more not less certain. The greatest source of any uncertainty is proven again to be the Fed itself. The FOMC decision and the materials accompanying it were a fiasco of a debacle. No hawks nor doves, just chickens running around headless. The problem isn’t Beveridge or even unemployment, it’s entirely about evidence for momentum from here on.

Summary: The media keeps trying to make us care about Fed “independence” or just the Fed at all when current events merely affirm how there is no reason to. The dollar is rising again. Canada’s GDP plunged despite BoC rate cuts. South Korea is trying offset the eurodollar’s work. Most of all, though, Fed Governor Christopher Waller isn’t just recommending rate cuts, he’s carrying the FOMC by actually making sense. That’s never a good sign, for the Fed or anyone else.

Summary: They are trying to make us care about the Fed’s independence. Lisa Cook was fired by President Trump unleashing a tempest in a teapot. The truth of the matter is, with or without Ms. Cook rates are going down. The evidence continues to pile up for this coming from every direction. Housing prices fell again, consumers are expecting recession like they had in April, and copper-to-gold is hundredths of a pip above another multi-decade low. Not only are low rates coming, they are solidly NOT inflation as some continue to claim.

Summary: It’s time to talk about China. Something is up with it. In this case, that means neither up nor down for CNY as a start. Sideways yuan is nothing good, as history has shown. And goes with what’s being implied by the entire range of data coming out of the country for July. Banks in credit crisis pulling back more on lending. Now industry slowing significantly, consumer spending sharply contracting, and capital spending falling off a cliff. It sure looks like payback therefore of great interest not just for China’s sake.

Summary: Raw copper was taken off the tariff list resulting in an historic crash in copper prices. Removing that distortion revealed the real level of unspoiled copper to gold which also plunged, but to a new four-decade low surpassing March 2020 and 2008. That’s not all: India’s rupee plummeted to its own record low. Then the US BEA put out income data for the US economy which confirmed all these grim financial signals coming from all over the place. There are no cleanest dirty shirts, only increasing soiled ones. But what does that really mean?

Daily Briefing 8/13/25 section 2.

Daily Briefing 8/12/25 section 1.

Summary: How negative can swap spreads go? Both the 10-year and 30-year maturities once again nearly hit a record earlier this week. Having barely moved since April, the question is, why? That contrast to stocks which have been furiously re-risking is more than enormous, there is a profound set of differences at work. Swaps aren’t just betting for a set of pessimistic scenarios, they’re also betting against interference on the forward rate curve. It all comes down to what really happened in April. I don’t mean tariffs.

Summary: That makes five in a row. Five months after tariffs were applied to the USA’s largest trading partners, evidence for any possible “inflationary” impacts remains thin. The fact it isn’t completely absent, however, has become the latest basis for the new tariff-inflation expectation coming later this summer. Meanwhile, what was actually in the CPI related more closely to real economic conditions came to show the opposite. Believe it or not, the latter now includes the shelter index for the first time since early 2021! Just as we predicted, even that significant shift won’t matter to the wafflers.