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The Macro Trade We'd Rather Be In
Macro forces are being driven by inflation pressure from the Iran war and hawkish talk from FOMC members. Bond traders are selling the long end of the curve, but we think they may be focused on the wrong trade. Instead, we expect a different outcome, and with it, a different trade that macro investors should be putting on.
If prices close near current levels, a major bottom may be in. That's what the technicals are signaling, and it's reinforced by central banks' push to diversify away from dollar dependence. As CTA trend-following funds reverse their positioning, the resulting buy flow could make a material difference and push this asset materially higher.
Specifically, there's one macro asset that looks set to resume its rally.
The US dollar is peaking, this has major implications for macro assets.
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