If higher rates are too much for equity markets, then they certainly are for consumers
Follow up to Friday's report ' Volatility Wakes'
Macro Thoughts, February 2, 2018, (entitled, ‘Volatility Wakes’): ‘US yields up, Dollar down, movement out of High Yield - Over the past six months, I have been discussing the implications and risks of a movement out of US Assets - could central banks have started already? Finally, after months of anticipating Volatility movement, option prices have started to move up in Forex, Equity and Bond markets, potentially signaling an increase of speculative ‘fast money’ positioning, which, if this is so, may have been entered at weak levels, and any correction could be painful and extended.’
Equity markets may quickly recover, though be volatile at least into Japan’s end of financial year at the end of March, (there have been Real Money Funds waiting for a correction), and trends may start to move in sideways ranges, across asset classes, though the pain should mean lessons have been learnt. The machines will continue to drive markets, but many Managers will now be more wary and acutely aware of the necessity of holding a macro overview, even for bottom up stock pickers.
Importantly, this should be a lesson to central bankers in the same way the Bernanke Taper Tantrum was in 2013.
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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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www.macrothoughts.co.uk
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