The next rate decision matters, but the more interesting trade sits inside what the market assumes happens afterwards.
The market can be right about another inflation scare and still be wrong about how long the policy response needs to last. That distinction is where I have been research and spending my time.
Across the US, UK and Euro-area futures curves on my screen (and yours at www.globalmacromethod.com for paid subs), rates peak around September 2027, then fall by only 9–12 basis points by December 2028. That is barely any reversal. We are not simply pricing another tightening phase; we are pricing a remarkably persistent one.
There are perfectly sensible reasons for central banks to remain cautious. But extending that caution several quarter into the future is a different proposition, particularly when higher energy costs can weaken the demand needed to sustain inflation.
One market stands out once you work through that tension. The attraction is how little needs to change, not how badly the economy needs to break.
Below i explore this and using a macro waterfall approach, where I break down the greatest asymmetrical trade lives from within these curves.
