The KRW typically moves against the USD and JPY in the same direction. However, more recently (since 2020), KRW has appreciated ~15% vs. JPY and depreciated ~20% vs. USD. Investors wonder if this could erode Korea’s export competitiveness given export similarities with Japan. This association may explain why KRW is the second-worst performing currency vs. USD in Asia YTD after JPY. It may also explain why MSCI Korea has underperformed AxJ even as MSCI Japan outperforms the latter in USD terms. The depreciation vs. USD has also led to market anxiety about whether BoK needs to keep pace with the Fed, to slow the economy and arrest KRW depreciation, or risk more severe ramifications from KRW weakness owing to import-led inflation and external debt. Indeed, the rates market expects BoK to hike in tandem to a terminal policy rate of ~3.4%, similar to what Fed futures are pricing in. We believe the macro implications from currency developments are less negative than markets fear. The bigger risk for Korea remains global demand uncertainty, in our view.

보고서: 일반적으로 원화는 달러와 엔화에 대해 유사한 방향으로 절상/절하를 보이지만 최근 다른 방향으로의 움직임이 발생, 일본과 유사한 수출 구조를 가진 한국의 경쟁력 우려를 일으켰음. 뿐만 아니라 계속적인 달러 통화 절하에 따라 한국은행이 미국 중앙은행에 맞춰 금리를 올려야 하는지(실제 최종 금리는 3.4%로 미국과 유사하게 책정 된 상태) 등의 우려를 낳고 있는데, 한국이 진정으로 걱정해야 하는 것은 환율이 아니라 세계 수요의 불확실성임. (Morgan Stanley - A Divergent KRW: Why It's Less Bad Than Feared)

Looking at the past five incidents when annual US inflation topped out at 5% or more, each one saw a fairly swift decline afterwards, especially the only two episodes when the peak was above June 2022’s 9.1% reading -- back in in the 1970s and 1980s. If economists are right that June 2022 marks the high in this cycle, then their forecasts for a deceleration to 2.7% by the end of 2023 would require that inflation cools by about 40bps a month. That’s a bit faster than the 30bps seen for the 1970s and 1980s occurrences, but it’s in the same ballpark. And if the trough is a bit higher or takes a bit longer then you would get a perfect match. The sting in the tail is that all five of the episodes covered included a recession as inflation dropped back down. That also underscores the bond market’s stubborn insistence that a hard landing is the more likely outcome.

함의: 만일 물가가 정점을 지났고 인플레이션 스왑이나 물가기대(BEI)에서 책정하는 2023년 연말 2.3%의 물가를 보려면 월간 40bp씩 물가가 하락해야하고 이는 과거 정점 이후 30bp씩 하락한 경로폭 부근임. 다만, 채권시장이 경착륙을 반영하는 이유는 과거 인플레이션 정점 이후 경기침체가 뒤따라왔기 때문임.

A global equity index is set for a third weekly advance and near a two-month peak in a recovery from bear-market lows, helped by resilient US company profits. The durability of the bounce remains in doubt as borrowing costs go up. “It’s a little too early to say the risk is off the table,” Carol Schleif, deputy chief investment officer at BMO Family Office, said on Bloomberg Television. “Significant slowing” is starting to come in parts of the US economy, she said. US payrolls Friday are the next key data point for markets. Hiring likely softened in July but the labor market remains consistent with an expanding rather than recessionary economy and the Fed will press on with rate hikes, according to Anna Wong, chief U.S. economist for Bloomberg Economics.

함의: 주식시장은 여전한 불안요소를 품은 가운데 약세장의 끝자락에서 3주간 연속 상승하며 2개월래 최고치에 근접함.

Bitcoin is higher on Friday and traders with long exposure will be hoping the change in nonfarm payrolls prints below the 250,000 estimate. For the past six US employment reports Bitcoin has responded to downside miss with a gain and an upside beat with a decline, in the 30 minutes after the data release. Last year the cryptocurrency responses were inconsistent to US payrolls, which may reflect that Bitcoin has become more in tune with the general risk on/off mood of assets in 2022.

함의: 현재 상승 중인 비트코인 보유자들은 오늘 고용지표가 시장 예상치를 하회하길 바라고 있는 것으로 보이는데, 지난 6번의 고용지표 발표 후 30분간 예상치 하회 시 상승, 예상치 상회 시 하락하는 반응을 보이며 작년과 달리 위험선호/회피를 대표하고 있기 때문임.

BofA Says Take Profit on ‘Bear Rally’ as Stock Outflows Resume. Investors have resumed shunning global stocks in favor of bonds, according to Bank of America Corp. strategists, who say the time is right to step back from US equities after the strong rally in July. Global equity funds had outflows of $2.6 billion in the week through Aug. 3, according to a note from the bank, after last week seeing their first additions in six weeks. US stocks had redemptions of $1.1 billion, and while $4.1 billion left cash, global bonds had additions of about $12 billion, the most since November, BofA said, citing EPFR Global data. Strategist Michael Hartnett, who has said the recent rebound in stocks was more a bear market rally than a sustained run higher, reiterated that investors should “fade” the S&P 500 Index from a level of 4,200 points -- just 1.2% above its latest close. He maintains that the bottom for the benchmark is below 3,600, or 13% below current levels.

함의: 장 끝났는데...???

In a market downturn, it’s challenging to find anywhere to invest. But beginning last year, one vehicle may be worth considering: active quantitative equity funds. Since the pandemic, systemic active funds have outperformed their benchmarks after three dismal years of performance from 2018 to 2020. Joseph Mezrich, head of quantitative strategy at Nomura Securities International, and his colleagues, Lai Wei and Thelonious Jensen, credit the success of equity quant funds over the last two years largely to the upward trend of long-term interest rates. It’s a pattern. Since 2010, they found that equity quant funds have performed well when rates have risen and poorly when rates have dropped. The persistent low rates of that era were a problem for them — and rising rates, if they persist, will be just what they need. In 2021, almost 67% of quant funds outperformed and in the first half of 2022, 60% outperformed on asset-weighted basis — and these figures are after fees have been taken into account.

함의: 최근 액티브 퀀트 펀드들의 성과가 우수한데 작년의 경우 이 유형의 펀드 67%, 올해 60% 수수료 차감 기준 초과수익을 달성했음. 이들 펀드의 특징은 금리하락기에 부진하고 금리상승기에 성과를 낸다는 것임.

This is a phenomenally strong jobs report, way stronger than forecast and more than the average payrolls expansion for the year through June. This will increase chatter for a 75-bp move from the Fed, and the reaction should be along those lines.

함의: 9월 중앙은행의 75bp 금리인상에 가까워지는 강력한 고용 보고서가 발표됨.

Former Fed Governor Randall Kroszner says on Bloomberg TV: “Certainly 75 basis points will be on the table for the next meeting.”

Here is tree-map visualization breakdown of the headline July number of 528,000 new jobs.

Average hourly earnings came in significantly higher than expected MoM, at 0.5% vs 0.3. Here’s the breakdown by industry.

FULL RECOVERY: Here’s the 29-month change in payrolls since the pre-pandemic highs in employment, broken up by industry.

The strong jobs report validates the Fed’s view of a resilient economy that can withstand additional interest-rate hikes. Traders must now recalibrate expectations for Fed policy, with a hike of three-quarters of a percentage point now the more likely scenario at the September meeting as the central bank battles inflation. A handful of Fed officials said this week reiterated the central bank’s resolve to bring down high prices. Among them is Fed St Louis President James Bullard, who has said he favors a strategy of front-loading big interest-rate hikes. That stance has likely strengthened after Friday’s job report, paving the path for an outsized hike and ruling out the possibility of a dovish pivot that Fed Chair Jerome Powell hinted at last week. “Odds of a 75 bp move next month have shot up, as they should,” writes Win Thin, global head of currency strategy at Brown Brothers Harriman & Co. “We still get one more jobs report before the September FOMC but barring a disaster, I think 75 bp then is a done deal.”

함의: 이번 고용 보고서는 중앙은행이 금리인상을 지속해도 경제가 굳건할 수 있다는 여러 인사들의 지난 발언을 뒷받침하며, 9월 75bp 인상은 확정에 가깝다고 봄.