Antipodean Capital Macro Strategy Daily Dec 4 - Tariff optimism barely held – a ST S&P peak near 2815-25 is likely. The US 2-10 curve has flattened 15bps, but 2y-1y and 3y-2y OIS curves are already inverted, flashing warnings.

Macro: US data: Last night’s ISM Manuf PMI headline was stronger, but worrying weakness in new export orders and a sharp fall in prices paid measures suggests that the inflation peak is well and truly in. Lower inflation alone is a positive for risk, but only if growth holds up, and there is doubt on that one.

Macro: Yield curve warnings: The US 2-10 curve flattened with speed to a new cycle low last night. In addition, 2y-1y and 3y-2y short bond curves are now inverted. Such inversions preceded cycle peaks and a slide into recession, so potential warning signs of a growth and inflation cycle peak need to be heeded.

Summary: US stocks held part of their Asian trade gains in the US session last night, but the rally underwhelmed and was reportedly on low volume. Our sense is that S&P will fail at resistances and head lower. US Manuf PMI headline was strong, but prices and new exports very weak. The US 2-10 curve flattened sharply to a new cycle low as a result. The USD weakened, and commodity prices were supported by that also.

New trades: None
FX: Short EURSTG at .9010 risk .9150 target .84. Long AUDNZD 1.0750 tgt 1.12 risk 1.05. Long GBP 1.2770 risk 1.27 target 1.33.Sold $JPY at 112.80 risk 114.20 tgt 110. Long EUR$ at 1.1360 risk 1.1260 target 1.18.
BONDS: Long 2 units ASX Banks 5yr CDS at 54bps, target 140. Long NZ 10s sell NZ 2s at 104bps risk 130bps target 50bps. Sold Portugal 10yr bought German Bund at 158bps, risk 110bps target 350bps.
EQUITIES: Long ASX All Ordinaries Top 100, Short ASX Small Ordinaries at 0.81x ratio. Short Homebuilders Long Kospi at 2.72x risk 2.62x target 2.92x. Long S&P, short Homebuilders at 3.49x, risk 3.35x target 3.8x.
COMMODITIES. Long Silver short Gold at 83.9x risk 87 target 65. Long Silver 14.08 risk 13.85 target 14.80+.