AMERICAS OIL: Today’s US Economic Data Have the Scent of Stagflation: El-Erian
Today’s US Economic Data Have the Scent of Stagflation: El-Erian
- Mohammed El-Erian, former CEO of Pimco, says on X that today’s data add to “concerns that the global economy’s only reliable engine of growth risks playing a game of economic Twister with a foot on stagnation and a hand on inflation.”
- For stagnation, he points to pending home sales for January fell to their lowest level on record, the weekly jobless claims were significantly higher than the consensus forecast, and the decline in Q4 nonresidential investment being revised down.
- For inflation, he points to the change in the PCE price index for Q4 revised to 2.7% from 2.5%, which made analysts look toward tomorrow’s January number (with the consensus at 2.6%).
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GBPUSD TECHS: Tests Resistance At The 50-Day EMA
- RES 4: 1.2667 High Dec 19
- RES 3: 1.2610 38.2% retracement of the Sep 26 ‘24 - Jan 13 swing
- RES 2: 1.2576 High Jan 7
- RES 1: 1.2520/23 50-day EMA / High Jan 27
- PRICE: 1.2438 @ 16:19 GMT Jan 28
- SUP 1: 1.2387/2294 20-day EMA / Low Jan 23
- SUP 2: 1.2229 Low Jan 21
- SUP 3: 1.2100 Low Jan 10 and the bear trigger
- SUP 4: 1.2087 0.764 proj of the Sep 26 - Nov 22 - Dec 6 price swing
A bull cycle in GBPUSD remains in play. The pair has cleared the 20-day EMA, marking an extension of the reversal that started Jan 13. Attention is on the 50-day EMA, at 1.2520 and an important resistance. Clearance of the average would highlight a stronger bull cycle. Medium-term trend signals are unchanged, they remain bearish. A reversal lower would refocus attention on 1.2100, the Jan 10 low and bear trigger.
STIR: FED Reverse Repo Operation
RRP usage rebounds to $112.760B this afternoon after falling to $92.863B yesterday - the lowest level since mid-April 2021. The number of counterparties rises to 28 from 26 prior.
BONDS: MNI Europe Pi: OATs Continue Short Drift, Gilts And BTPs Flat (2/2)
Elsewhere in European positioning:
- OAT: OAT is in very short positioning, maintaining the longer-term drift in that direction since mid-September (was "short" in our last update). Recent trade suggests shorts cover, however.
- GILT: Gilt structural positioning has shifted to flat vs long previously, with recent price volatility only briefly seeing a dip toward shorts. The most recent week saw some short covering.
- BTP: BTP has exited structural longs for our first update since summer 2025, with our current reading at flat. Longs were reduced in the most recent week of trade.
