Macro Investment Insights & Market Commentary

What Can The Treasury Achieve With Bond Buybacks?

The US Treasury department’s attempts at yield suppression are doomed to fail unless the Federal Reserve gets involved....

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Will Bessenomics Avert A Stock-to-Bond Collision?

If bond yields rise due to widening bond term premiums or escalating inflation expectations, Bessenomics is unlikely to avert a stock-bond collision. Buy back gold mining stocks....

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China’s Current Account Surplus: The $1 Trillion Question

In this report, we highlight notable developments on both sides of China’s BoP: a widening external surplus on the current account side, and shifts in how that surplus is recycled abroad through BoP financial account....

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Are We Losing Control Of The Long End?

Despite recent increases, long-maturity Treasury yields are roughly consistent with fundamental fair value. We see limited value in long duration plays....

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Peak Hawkishness Down Under

The RBA is likely done hiking, and the RBNZ overpriced for more hikes. We trace both conclusions back to housing, credit, and external dynamics, with implications for our country allocation in ANZ bonds and our long AUD/NZD view....

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Get Out Of The Dollar (G.O.D.)

Arthur discussed:

Global currency markets are on the edge: the US dollar will become pro-cyclical, and the euro will become counter-cyclical.
This regime shift would upend financial market correlations, and most investment portfolios are not positioned for it.
The main driver of currency markets will change from interest rates to the balance of payments.
The dollar’s dependence on net foreign flows into US equities is far greater today than ever.
A low bar for US dollar depreciation: No net capital outflows necessary — just smaller inflows.
A weaker US dollar will be deflationary, not reflationary, for the rest of the world.
EM stocks will not rally in absolute terms despite a weak US dollar.
Which asset classes and regions will perform the best during this US dollar devaluation?

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Chief Economist’s View: Give Me Chastity But Not Yet

An acute shortage of AI hardware will support tech stocks into year-end. However, AI companies may need to ultimately generate $10 trillion per year in revenue to justify their capex. Barring a massive increase in productivity growth, this will be very difficult to achieve. Despite today’s Treasury ...

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Sweden And Norway: A Reversal Of Fortunes

The war in Iran and the energy shock are driving a reversal of Nordic fortunes: Sweden’s recovery is faltering just as Norway receives a welcome energy windfall. Favor Norwegian over Swedish equities and buy NOK/SEK. In rates, fade aggressive Riksbank hike expectations and downgrade Norwegian govern...

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Sector Chartpack: Strong Earnings, Bond Market Remains the Key Risk

Q2 earnings confirm broad-based strength, but the bond market remains the key risk to equity multiples given today's positive stock/bond correlation regime. We close our tactical GDX long for a 16% gain, though we continue to view goldminers as a valuable structural hedge....

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Petrochemicals: A Chinese Pivot To Coal

The Hormuz crisis has exposed a structural vulnerability in China's petrochemical value chain. Going forward, Beijing will look to build greater supply security by scaling up coal-to-olefins capacity — a shift that creates a structural tailwind for coal prices and a structural headwind for oil....