Prodomas

Chief Expertist

[Prodomas @Prodomas1]

Now, two months is a short period to test this, 17 June was a bit of a mess (new chair, SEP, Middle East language, oil-route headlines), so maybe this is all going to change soon. But so far, killing FG has not led to more impact of macro on rates.

[Prodomas @Prodomas1]

Warsh said they dropped forward guidance because it wasn't suited to this cycle, which everyone took to mean Treasuries would start taking more of their orders from the data.

Did they?

No. Extra daily yield movement on macro news days is smaller after 18 June, not larger, and the only maturity where you can actually say that is the 30-year.

[Prodomas @Prodomas1]

This finding is even sharper in placebo tests, where we compare the post June 18 period to otherwise similar days without macro news.

[Prodomas @Prodomas1]

4/ So the risk isn't necessarily inflation. Bank balance sheets fund bonds, FX hedges and AI. Squeeze it and they all fall together.

[Prodomas @Prodomas1]

3/ Why now: central banks split after the oil shock, some hiking, some cutting. El-Erian says nobody's backstopping it anymore. That gap is what drives the whole thing.

[Prodomas @Prodomas1]

@SantiagoAuFund accurate

[Prodomas @Prodomas1]

@SantiagoAuFund 😉

[Prodomas @Prodomas1]

@SantiagoAuFund whole communication today is next level retarded …

[Prodomas @Prodomas1]

@SantiagoAuFund @LynAldenContact @asdasmos2 you may have went too far

[Prodomas @Prodomas1]

@SantiagoAuFund @MichaelOHogan1 But my comment on size was more about the definition of „largest“.. according to which metric (trading vol, outstanding volume, something else). Would generally argue that FX market (which includes some ED instruments) is the „largest market“

[Prodomas @Prodomas1]

@SantiagoAuFund @MichaelOHogan1 Could in theory shrink slowly over time with persistently negative interest rates. But in practice that‘s not very likely, so will grow bigger

[Prodomas @Prodomas1]

@SantiagoAuFund @LynAldenContact @asdasmos2 Dollar will top once you lose your modesty 😉

[Prodomas @Prodomas1]

@SantiagoAuFund @MichaelOHogan1 easy to say, hard to prove…

[Prodomas @Prodomas1]

@SantiagoAuFund year after year after year, the US has achieved a large and positive KFA surplus. What‘s not to like?

[Prodomas @Prodomas1]

@SantiagoAuFund let‘s just highlight, from now on, that the US has a positive capital/financial account so people will not worry about USD anymore

[Prodomas @Prodomas1]

@profplum99 lettuce investigate this

[Prodomas @Prodomas1]

@SantiagoAuFund @GRomePow @shortl2021 @PeterZeihan is it getting boring yet (the strong dollar)? I think it‘s getting boring