Structurally I agree with the thesis. However, what we need to keep in mind that post GFC, treasuries have become the basis of the plumbing in the repo markets. So the liquidity is very much the price driver and I think that's what's driving the demand for TLT in the S-T. So the punishment is awaiting fo r those who will not get out after the next liquidity event
Additionally the EU gas crisis, while not completely over, is far less risky with TTF around €60/Mwh and not the economically ruinous €200+ prices we saw 3-4 months ago.
Admittedly core inflation is still elevated and I think that inflation has swept into sticky services sectors. But two of the most powerful inflationary headwinds have now started to normalise.
Yep the majority of people care about the price of their food shop and that is not going down. Really plays into a potential global food subsidiary policy in the coming quarters. Similar to energy subsidies given over this winter.
From a subscriber: How do you reconcile the trajectory of rates in 70’s vs 2020’s due to debt levels, especially Sovereign debt levels.
Structurally I agree with the thesis. However, what we need to keep in mind that post GFC, treasuries have become the basis of the plumbing in the repo markets. So the liquidity is very much the price driver and I think that's what's driving the demand for TLT in the S-T. So the punishment is awaiting fo r those who will not get out after the next liquidity event
Russell if you look at Chinese pork prices (Unfortunately I don't have the data handy but you can see here: https://en.macromicro.me/collections/24/cn-price-relative/12773/cn-pork-price-vs-cpi) they do appear to be returning back to their long run average ¥20-25/kg.
Additionally the EU gas crisis, while not completely over, is far less risky with TTF around €60/Mwh and not the economically ruinous €200+ prices we saw 3-4 months ago.
Admittedly core inflation is still elevated and I think that inflation has swept into sticky services sectors. But two of the most powerful inflationary headwinds have now started to normalise.
Yep the majority of people care about the price of their food shop and that is not going down. Really plays into a potential global food subsidiary policy in the coming quarters. Similar to energy subsidies given over this winter.