USD hits pause button on the reflation trade

Updated: Feb 18

In this week's Macro Insight call we discussed...


the dollar rally continues to drive all things macro.  Will we get to the 92 target on DXY? We identified the US 10 year bond yields had a big move up towards 1.20, as growth and inflation expectations rise. What level on yields will spook the market this time? Is NDX vulnerable to a pullback?


We talked through SPX having a small correction last week, but remains bullish in the face of worsening COVID data and civil unrest due to Biden’s inauguration looming. US Bank earnings releases this week, will these stocks be the leader in the next leg higher? Steeper yield curves and buybacks should be supportive.


Surveys suggest extreme bullish sentiment due to the reflation narrative, although VIX trades at a massive premium to realised. What gives? We discussed how gold outlook has been given the back up in real-yields. Do we need yield curve control before the next move higher can begin? Finally, broad commodities continue to break higher despite USD strength. Asset price inflation is real, whatever the CPI basket says!


Filmed on Tuesday 19th January 2021.


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