Don’t worry. Fed will do buybacks next year
We believe that the Fed will follow BoJ buying Japanese bonds and ECB buying Italian bonds. There is no other option left.
Mean reversion on its way.
Shifting geopolitical forces have forced government policy (IRA, CHIPS, IIJA) and corporates to rethink their capex spending, and our big bet is that this ratio has likely peaked, and a slow, but eventually meaningful reversion is underway. And by the way, this is a Western trend, not a U.S. one.
Correlations not working at more
G-7 practically confiscated Russia’s Forex reserves after Ukraine/Russia war. Since then, G-7 bonds have lost global buyers.
China trying to rebalance its economy
China’s economy has been over reliant on property prices for its growth. That seems to be changing slowly but it is a long-drawn process
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