Did this week give a glimpse into the future?
We have anticipated, since August, to expect US inflation to rise considerably above the Fed’s 2% target, targeting 10 year yields to rise from 0.68% to 1.55% in the medium term and, in the short term, to remain within a range between 1.5% and 1.75% - but new dynamics have started to hit the market which will have long term implications.
As the US and the UK start to move out of lockdown, events over this week may have given some insight into what to expect in the future - a reminder for the need to move with the times, heed the warnings and to think differently.
The fallout from the bank losses from Archegos is a reminder of the collapse of LTCM in 1998, and similarly will extend beyond actual profit and job losses....reducing the amount of funding and leverage to the hedge fund, family office and wealth management industries.
Of greater concern for the global economy is the future of defaulting Huarong Asset Management....
Mortgage rates falling, refinancing, and a health property market, also saw mortgage payments take a priority. For Q3 2020, the delinquency rate was 0.75%, compared to 1.95%, and 1.13% of credit cards and auto loans, respectively, reflecting a working from home environment; but now, as lockdowns end, car sales have already started to pick up.
Macro Thoughts, March 25, 2021: ‘With US yields expected to trade in a range for a while, this should take some pressure off global bond markets, including High Yield, and other asset classes. As this develops, we are aware that consensus positioning could become complacent and a risk later in the year’.
Macro Thoughts Ltd
Since 2012, top tier global Hedge, Pension, Investment and Insurance Fund managers, as well as corporates and private individuals, have benefited from Macro Thoughts’ proven insight, market commentary, hedging, and investment strategies to leverage opportunities, with positive returns on over 75% of strategies, producing double digit returns for our clients over consecutive years.
Macro Thoughts is independently researched and draws on extensive macroeconomic and market experience gained in Fixed Income, Futures, Derivatives, Bond, Forex, Commodity and Equity Index markets and from strong Global Macro investment, risk taking and strategy backgrounds. Far-reaching product knowledge across asset classes enables us to consider hedging and investment strategies that reflect our expected market trends. Macro Thoughts is directed by Keith Grindlay, whose experience spans, somewhat uniquely, both the buy and sell side, having managed trading and investment desks at top tier institutions, ensuring all strategies are evaluated for risk/reward and the optimal instrument(s) for best leveraging the strategy suggested are employed.
Globally recognised for strong analytical skills, aligned with a particular aptitude for anticipating global economic events ahead of the majority of commentators, Macro Thoughts’ independent fundamental economic research and analysis and resultant strategies have a track record that assures exceptional results, with a service that surpasses the model of bank-supplied, partisan research and stands out from the general contributions on platforms that your clients and peers already have access to. The support and value offered by Macro Thoughts, delivering written research and analysis, presentations and consulting services, is backed by decades of macroeconomic and market experience and can be tailored to your specific requirements.
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