TD Research discusses the current market conditions and notes that the market has started to shift its attention towards growth and inflation.
"We look at growth, inflation, and risk sentiment and how they tie back to the USD. These factors suggest that the market has started to shift its attention towards growth and inflation - traditional meat and potatoes macro. We think the revolving narrative related to growth, inflation, and a possible pivot in the central bank regime offers some clues to the importance of these market themes," TD argues.
"It too shows US growth and inflation signals lagging the G10 - important to note ahead of retail sales and Fed speak this week. That's not recession territory, but it offers evidence of some new slack.
More critical for FX, perhaps, the US is starting to show the most severe signs of stress, reflecting the loss of momentum and the scope for a "corporate" recession," TD adds.