The market has a view on where rates are going. I’m more interested in what the economy looks like when they get there.
Higher oil, higher yields and another round of rate-hike expectations. That is the backdrop, and I’m not going to pretend the inflation problem has disappeared. The latest selloff has a perfectly understandable starting point. Pasted text
But markets can take a sensible argument one step too far.
There is a difference between an economy that needs another hike and an economy that can comfortably absorb everything investors expect afterwards. That distinction is where my attention has shifted.
I’m less interested in guessing whether the next central-bank statement sounds hawkish. I want to work out which part of the economic story becomes harder to sustain once that hawkishness starts doing its job.
There’s a trade here that doesn’t require an immediate policy reversal. It does require accepting that the timing could be uncomfortable.
Below, I walk through the macro, the pricing and the position I’m taking, including the entry, stop and risk.
Below is the dashboard all paid subs get access to, www.globalmacromethod.com
