Band-aids don’t fix bullet holes
Here we are in the US at $40T debt, equities at all-time highs, rates sticky, and bond vigilantes making a showdown versus the US Treasury.
The view
Bessent blinked first and showed his hand, but a bazooka of a program seems to be needed to get the back-end lower, not the paltry $4B announced on Wednesday.
Even reducing rates 12 months ago did not do much to get the 30-year back down.
Price action is becoming volatile, with steepener positions hurt on Wednesday, causing de-risking, while “inflation proxies”, precious metals, commodities, and bitcoin, are bid to the moon.
Can global equities sidestep the macro to continue to grind higher, or do we have some tumultuous moments ahead?
Global markets & economic data
- US
Housing Starts fell in all regions besides the Northeast. FOMC July meeting minutes were hawkish as three regional Fed Presidents voted in favor of a 25bps hike.
- Switzerland/UK/Germany
Swiss Industrial Production grew by 5.5% y/y in Q2, above expectations. The UK Unemployment Rate was unchanged at 4.9%. Germany’s ZEW Economic Sentiment Index hit its highest level since February.
- Japan/China
Japan’s Q/Q Q2 GDP is estimated to be 0.3%, below forecast and its July inflation rate rose to 1.9%. Chinese July Industrial Production and Retail Sales were both below expectations.
Disclaimer: This material has been prepared by MASTERPIECE ADVISORS for informational purposes only and should not be construed as financial advice. Investments in hedge funds are speculative and involve a high degree of risk. This material is confidential and may not be disclosed without the express written approval of MASTERPIECE ADVISORS.
Weekly market notes every Friday from Aaron Sweeney after the closing bell.