Glossary

Twin deficits occur when a country runs a fiscal deficit and a current account deficit at the same time, pressuring its currency and bond market.

Sovereign debt explained: how Treasuries, gilts, JGBs and Bunds price fiscal risk, anchor yield curves, and drive currency moves across G10 markets.

Primary deficit explained: the headline fiscal gap minus interest costs, used by the IMF and bond desks to judge debt sustainability and fiscal discipline.

Debt to GDP measures a country’s total public debt against annual output. The desk explains how traders use it to gauge fiscal risk and currency stability.

Fiscal deficit explained: how government overspending drives bond supply, yields, and currency moves. The desk breaks down what FX traders need to watch.

Balance of payments explained: how the current account, capital account and financial account record a country’s external flows and shape currency trends.

Current account explained: the broadest measure of a country’s external balance covering trade, primary income and transfers, and why it matters for FX.

Trade balance explained: the gap between a country’s exports and imports of goods and services, and why it moves currencies on release day.

NFIB Small Business Optimism Index explained: how the monthly US small business survey signals hiring, pricing, and credit conditions for macro traders.

Capacity utilization measures the share of installed industrial capacity currently in use. The desk explains how it signals slack, inflation pressure and policy.

Industrial production measures real output from factories, mines and utilities. The desk explains how traders read the release and position around it.

Durable goods orders explained: the desk breaks down this monthly US capex proxy, why it shifts the dollar, yields, and equity sentiment.

Retail Sales is the monthly US consumer spending headline. The desk breaks down the release, the control group, and how traders position around it.

Michigan Consumer Sentiment is a monthly UMich survey tracking US household confidence and inflation expectations watched closely by Fed policymakers.

Conference Board Consumer Confidence Index measures US household sentiment on jobs and the outlook. The desk explains how traders read CCI prints.

Composite PMI blends manufacturing and services survey data into one activity reading. The desk breaks down how traders read it for macro and FX timing.

ISM Services PMI is a US services sector diffusion index. The desk explains how it is built, why it moves markets, and how traders use it.

ISM manufacturing PMI is a US factory sentiment diffusion index where 50 separates expansion from contraction. The desk breaks down how traders read it.

Initial jobless claims is the weekly count of new US unemployment filings, a high frequency labour proxy released by the Department of Labor each Thursday.

Average Hourly Earnings (AHE) measures US wage growth inside the NFP report. The desk explains why traders watch it for Fed policy and inflation signals.

Labour force participation rate measures the share of working age people active in the workforce. The desk explains how traders read LFPR alongside NFP and CPI.

U6 unemployment captures discouraged workers and involuntary part-timers, giving a fuller read on US labour slack than the headline U3 rate.

Unemployment rate is the U3 jobless measure from the household survey. The desk breaks down how it is calculated and why it moves the dollar.

ADP Employment Report tracks US private payroll changes and is released two days before NFP. The desk explains methodology, market impact, and trading use.

JOLTS explained: the US Job Openings and Labor Turnover Survey tracks vacancies, hires, quits and layoffs, signalling labour market tightness to the Fed.

Non-farm payrolls (NFP) is the headline monthly US jobs report from the BLS. The desk explains how it moves USD, gold, and equities.

NAIRU is the unemployment rate below which inflation tends to accelerate. The desk explains how central banks estimate it and why traders watch it.

Phillips curve explained: the inverse link between unemployment and inflation, why central banks still cite it, and how traders read the signal.

No landing describes a macro outcome where growth stays firm, the labour market holds up, and inflation remains sticky despite tight policy settings.

Hard landing explained: when central bank tightening to tame inflation ends in recession, rising unemployment, and a forced pivot back to easing.

Soft landing explained: when a central bank cools inflation back to target without triggering recession or sharp rises in unemployment across the cycle.

Potential GDP explained: the supply side output level an economy can sustain without generating inflation, and why central banks anchor policy to it.

Output gap measures the difference between actual and potential GDP, signalling inflation pressure or economic slack that drives central bank policy decisions.

GDP deflator explained: how this broad price index differs from CPI, why central banks watch it, and how macro traders read the quarterly release.

Hyperinflation is the regime where monthly inflation exceeds 50 percent, currency loses value daily, and price discovery breaks down across the economy.

Reflation describes inflation and growth recovering toward target after a downturn. The desk explains drivers, market signals, and how traders position.

Disinflation is a slowdown in the rate of inflation, not a fall in prices. The desk explains how it differs from deflation and why it matters to traders.

Headline vs core inflation: the desk explains what each measure captures, why they diverge, and how central banks weigh both when setting policy.

PPI (Producer Price Index) tracks wholesale price changes faced by domestic producers, often leading CPI and shaping rate expectations across major currencies.

Core PCE is the Fed’s preferred inflation gauge, stripping out food and energy. The desk explains how it differs from CPI and why it moves rates markets.

Core CPI strips food and energy from US inflation to reveal the underlying trend. Learn how traders read it, why the Fed prioritises it, and how it moves markets.

5s30s spread explained: the 30yr minus 5yr Treasury yield gap, why it matters for inflation expectations, term premium and macro positioning.

The 2s10s spread is the 10 year minus 2 year US Treasury yield gap. The desk explains why inversions historically precede US recessions.

Term premium is the extra yield investors demand to hold long dated bonds versus rolling short bills. The desk explains how it is measured and why it matters.

Fed funds rate explained: the Federal Reserve’s target range for overnight interbank lending and the anchor for US short-term rates and global dollar pricing.

ON RRP is the Fed’s overnight reverse repo facility that places a floor under short-term US rates. The desk explains the mechanics and market signals.

IORB is the rate the Fed pays banks on reserve balances. The desk explains how it anchors the funds rate, why it matters for USD, and how traders read it.

Reserve requirement defined: the minimum share of deposits banks must hold as reserves, why central banks adjust it, and how it shapes liquidity and FX.

Balance sheet runoff is the passive reduction of a central bank’s holdings as bonds mature without reinvestment. Learn how it works and why it matters.

Quantitative tightening (QT) is how central banks shrink their balance sheets after QE, draining liquidity from markets and tightening financial conditions.