Macro Hive Conversations With Bilal Hafeez Ep. 321: Antonio Del Favero on Favourite Rates Trades, Fed and Dollar
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Aug 14, 2025 Antonio Del Favero, a macro strategist with a rich background in hedge funds, dives into the intricacies of the US economy and G3 rates markets. He emphasizes the critical role of financial conditions in assessing economic health. Del Favero discusses how shifting market sentiments impact Federal Reserve interest rate expectations and the tech sector’s influence on equity performance. He also tackles inflation trends, the dollar's evolving role, and the differing economic signals from the UK and Eurozone, offering valuable insights for strategic investments.
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Why Financial Conditions Matter
- Financial conditions measure how easy households, businesses and governments can obtain financing and are key market-based leading indicators.
- They combine long and short rates, credit spreads, equities and the dollar to signal economic direction.
Drivers Behind The Early-Year Slowdown
- Antonio called a slowdown early in the year driven by tighter long-end yields, a strong dollar and tariffs affecting confidence.
- He links these financial condition moves to weaker real personal consumption and growth near 1.5%.
Tariffs Hit Growth Via Two Channels
- Tariffs both raise uncertainty and directly erode corporate margins, reducing capex and consumption.
- Antonio believes the slowdown comes from a mix of uncertainty and direct tariff impacts, though the exact split is unknown.