The Macro Trading Floor Volatility is Coming
Mar 15, 2024
Exploring the impact of rising inflation on global macro asset classes and trade ideas. Analyzing real rates near 2% and its effect on Federal Reserve policies. Speculating on $100 oil prices, rate hikes, and bond market volatility. Delving into economic forecasts, Swiss National Bank meeting, and online flexing dilemmas. Hinting at a special guest appearance and upcoming Spectra School sign-up.
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Bond Market Awakens to Inflation
- The bond market is waking up to inflation possibly being stickier, causing rising real rates.
- This may shift the market from a low volatility regime to a more volatile economic environment.
Inflation Reacceleration Challenges Fed
- Core inflation is reaccelerating back toward 3%, challenging the Fed's confidence.
- This suggests the Fed's policy is less tight than assumed, possibly raising the neutral rate instead of aggressive cuts.
Fed's Dots Could Signal Strategy Shift
- The key Fed signals to watch are the median dots for 2024 and the longer-term dots for 2025 and neutral rate.
- Market expects multiple cuts, but the Fed may shift to a few cuts then a pause, like in 1995.