Takeaway

The presenter's core view is that the upcoming U.S. CPI print is a pivotal event for markets, driven by renewed inflation concerns from oil prices trading over $100. A higher-than-expected CPI number could push U.S. Treasury yields above 5% and cause a significant move higher in USD/JPY, which the speaker identifies as a new "battleground" for client positioning.

What the presenter said

• Oil is trading above $100 a barrel, with Brent specifically cited at $102 a barrel. [00:05]
• Inflationary concerns are rising and yields are elevated ahead of Friday's key U.S. inflation data. [00:07]
• The market expects the U.S. CPI figure to be 0.4%. [00:54]
• The presenter notes that the March to May period saw the highest inflation figures since 2023. [01:07]
• If CPI comes in higher than expected (at 0.5% or 0.6%), the speaker believes the chance of a rate hike this month (16th-17th) will go to 100%, with another hike expected before year-end. [01:37]
• The presenter argues that Scott Bessent, Head of the Treasury, is in a difficult position and must "go to war" with the markets to control Treasury yields. [02:16]
• Client positioning is reportedly long indices and short oil, on the belief that oil is peaking. [03:49]
• The new focus for clients is USD/JPY, where positioning is described as firmly short. [03:57]
• A large CPI figure could cause USD/JPY to "fly", while a low number could see an unwind of positions, especially as the Japanese government is expected to raise rates again. [04:33, 05:19]
• The presenter suggests USD/JPY could potentially move to 180 or 120. [05:51]

Trade ideas

The presenter discussed client positioning rather than outlining specific trade ideas. * Instrument: Indices * Direction: Long * Thesis: Based on client positioning. * Entry/Target/Stop: Unspecified * Conviction: Low

• Instrument: Oil
• Direction: Short
• Thesis: Based on client positioning, reflecting a belief that oil prices are peaking.
• Entry/Target/Stop: Unspecified

• Conviction: Low

• Instrument: Dollar/Yen

• Direction: Short

• Thesis: Based on firm client positioning for Yen strength against the Dollar.

• Entry/Target/Stop: Unspecified

• Conviction: Low

Levels and data cited

• Oil: Trading above $100 a barrel.
• Brent: $102 a barrel.
• U.S. Treasury Yields: Scenario for yields going over 5%.
• Dollar/Yen: Retracement from 164 to 154 mentioned; potential moves to 180 or 120 cited.
• U.S. CPI (Friday): Expected at 0.4%.
• U.S. CPI (Mar-May): Cited as the highest figures since 2023.
• Rate Hike Chance (16th-17th): Currently a 60% chance priced in.

Risks and what would invalidate this

• A higher-than-expected U.S. CPI figure could lead to multiple rate hikes and increased pressure on the U.S. government.
• The U.S. Treasury's aggressive stance against market expectations for yields could lead to unpredictable market movements.