ALL THINGS BIG AND SMALL 2.0

 Scenario Probabilities *My heartfelt thanks to EODHD.com for helping me with financial markets historical data. A truly innovative data source company.  They have data on Equities, Indices, ETFs, Forex, Crypto and cover more than 60 Exchanges worldwide. Check them out.      EXECUTIVE SUMMARY For background reading on model, inputs and methodology please read https://ngtiankhean.blogspot.com/2025/08/usa-stagflation-risk-dashboard-11-aug.html  Main takeaway for this week: The picture is mixed, very noisy, contradictory and confusing.  All scenarios almost equally likely Stay away. Wait till a a clearer picture merges.  What changed since last week • Inflation compensation: 10Y breakeven 0.0 bps to 2.41 (%), 5Y -2.0 bps to 2.47 (%). • Real rates: 10Y TIPS 0.0 bps to 1.81 (%), 5Y TIPS +1.0 bps to 1.2 (%). • Curve: 2s10s changed -5.0 bps to 0.6 (% points). • Credit risk: HY OAS -3.0 bps to 2.75 (%). • CPI: No new monthly print since the...

Raw Crab and Green Papaya Salad Larb (Spicy Minced Pork with Onion and Dried Red Chili) Om Moo-very spicy prk soup with long bean, mini eggplant and mushrooms Glutinous Hill Rice  The food of the region is distinct from the usual Thai food that we are familiar with such as Tom Yum Kung and Pad Thai. It is much spicier. Few Thai restaurants in Singapore serve authentic NE food. Na Na at Aperia Mall Lavender St) does. Photos below from left clockwise (1) Raw Crab and Papaya Salad. (2) Lab: Spicy Minced Pork with Herbs and Dried Red Chili (3) Spicy Pork Fillet, Mushroom, Long Bean and Mini Egg Plant Soup (4) Glutinous Rice. Thailand can be divided into 4 main regions. The central plains where Bangkok lies. The North where Chiang Mai and Chiang Rai are, The South which borders Malaysia and parts of Myanmar. And the North-East ( known as Isaan or the Korat Plateau) with its arid climate.The region is the poorest part of Thailand which results in many male members of the population seeki...

In South Indian vegetarian cuisine, a Thali is a platter/set meal of many  dishes served in small containers. Here you see a SuperThali of 17 dishes that I ate with my rice. In addition to my portion of rice served on a Banana leaf, the SuperThali meal also served  a Papadum ( Lentil Cracker) and a Paratha ( whole Wheat flatbread. The contents of all the small containers include: Beetroot , Chickpea curry, Lentils, Tomato Soup, Tamarind juice, Egg Plant, Yoghurt, Sambar of dried Red Chili, Potato,Green Pea, Wheat Flour  dumplings.  The SuperThali meal was accompanied by a Mango Lassi drink, and ended with a serving of  serveral colourful Indian sweets that you can see below:  

Announcement: New Payroll Inputs for Stagflation Risk Dashboard from 1 Sep 2025 Let’s refresh our memory on the   current inputs of our stagflation risk model before we talk about the new Payroll input. 2s10s Yield Curve Spread What it is: The 2s & 10s yield spread refers to the difference in yields between the 2-year and 10-year U.S. Treasury bonds. It is calculated by subtracting the yield of the 2-year bond from the yield of the 10-year bond. Why it matters:  A yield curve inverts when long-term interest rates drop below short-term rates, indicating that investors are moving money away from short-term bonds and into long-term ones. This suggests that the market as a whole is becoming more pessimistic about the economic prospects for the near future. Breakeven Inflation and 5y5y Forward with CPI What it is: A simple approximation of expected inflation 5–10 years ahead using 2 × (10Y breakeven) − (5Y breakeven). Why it matters: A measure of long-run inf...

  Takeaway: Probability mix updated weekly using breakevens, real yields, the curve and HY OAS. Week over week: 10Y breakeven +3.0 bps, 10Y real yield -2.0 bps, 2s10s curve change -3.0 bps, HY OAS +7.0 bps. EXECUTIVE SUMMARY What changed since last week. Minor changes since last week, so charts will look about the same • Inflation compensation: 10Y breakeven +3.0 bps to 2.41 (%), 5Y +6.0 bps to 2.48. • Real rates: 10Y TIPS -2.0 bps to 1.94 (%), 5Y TIPS -2.0 bps to 1.42 (%). • Curve: 2s10s changed -3.0 bps to 0.54 (% points). • Credit risk: HY OAS +7.0 bps to 2.95 (%). • CPI: No new monthly print since the prior report; CPI panel unchanged week over week by design. Implications • 5y5y Forward slightly higher breakevens with softer real yields tilt mildly inflation-first versus last week, but magnitudes are small. • 2s10s Yield Curve move is modest; watch for re-steepening led by long-end selloff paired with firm breakevens as a stagflation signal. • HY spread widen...

USD/JPY data as of 20 Aug 25 from FRED. USD/JPY is one of the most interesting currency pairs to trade these days, with some opportunities  for short term gains. If we review the MAGA Man's Trade War and Tariff antics, we can see that of all the countries this school yard bully has bullied/cajoled/ran away from, Japan is most at his mercy. (In 2nd place is Europe). China doesn't give a hoot about Trump, India will keep buying Russian oil, the BRICS countries are making good progress in de-Dollarization, Russia will keep pummeling Ukraine. Japan, being the most dependent on the US market for its exports (steel, autos, semiconductors) has a high probability of tipping into a recession. (at least the South Korean economy is more diversified in its export markets)And with a debt/GDP ratio of 260, and rising inflation, there is not much room for fiscal or monetary stimulus. All this will be reflected in a new secular trend for USD/JPY. In this post we will attempt to determine the r...

The chart above shows USD/JPY from 1971 at 6-monthly intervals. It's rather frightening to see that USD/JPY used to be as cheap as 350 Yen to USD1.00. Compared to this the current range of USD/JPY 140 to 150 is fantastic. What has happened to USD/JPY  has also happened to the GBP/SGD and the USD/SGD and now AUD/SGD.  If I remember correctly, in the early 70's GBP/SGD was around 7.00 (today it's 1.73) and USD/SGD was around 3.60. (today it's 1.28). So if you take a long term view and the big picture I would dare to say that exchange rates are a valid and good indicator of the rise and fall of economies. When I  take a look at SGD/AUD, I wonder if the good old days of the Lucky Country  are over. SGD/AUD is now around 1.22 It used to be that SGD/AUD was <1. This brings me to what I quoted from the Bible on this blog in 2008-15 years ago. I was reflecting on the unpredictability of financial markets. The image below is a n-dimensional continuous wavelet transform of ...