sounds about right.

Raoul/Julian, great pieces about "big picture" topics. Long term ideas to keep in the back of our minds as we try to play shorter term ideas.

Excellent, thoughtful pieces. Julian: The shift away from China may prove very advantageous to Japan, which will more tightly align with the US while offering competition to China across growing Asian markets. Japan also has no fear of robotics as their popultion is aging and capital is available. Thoughts? Agree Mexico and Vietnam will benefit long term as well.

For the chart on crude futures volume, can you post the bberg tickers please. Thanks.

Marvelous from Raul and Julian. One of the key conflicts in Chimerica is the AI bubble/propaganda. It gives infinite imagination and causes undue confidence and fear on both sides. The reports of huge AI investment race as well as revolutionary impact of AI appears in media from time to time (google "artificial intelligence magazine cover"). Then here is Spyos Makridakis's tweet ["When AI will reach the intelligence of a one-year old?” My own prediction: After a very, very … LONG time!]. Once the bubble burst, people will have clear and calm mind. After all, AI should be more about intelligence than speed. We mostly see information collection and (cloud) computing capacity buildup more than intelligence buildup. The cloud computing is quite similar to optic fibre in 2000.

Long-term bond yields would be falling if not for the speculative short interest on Treasuries. QE caused short-term yields to fall and long-term yields to rise, which is easily seen by using the FRED database to chart 10-year Treasury yields against the Monetary Base. In the latter half of QE1, QE2 and QE3, long-term yields rose. In between, long-term yields fell. As the Fed engages in QT, short-term yields should rise, and they are, and long-term yields should fall, but they aren't due to the speculative short interest. If the Fed were to completely unwind their balance sheet, which they won't, they could drive long-term yields to zero for an extended period of time. What I don't get is why everyone thinks long-term yields have to rise. Clearly they don't understand QE/QT, our monetary system, or how the Fed broke the inflation-creating mechanism in our economy back in the mid-1980's. If the speculators are doing this to keep the yield curve from inverting, then I understand. Otherwise the speculators are fighting the Fed's unwind, which will lead to the biggest short-squeeze in the history the Treasury market and will validate RP's view.

This is one of the best pieces I've read. It provides a backstory to help those of us who are newer to macro and lays out the current world we're playing in. I would love more pieces like this.

Both sections are truely enlightening! Concerning Roul's analysis of the situation in Europe and Germany's position within, I would like to point to the 'Agenda 2010', developed in 2003-2005 under Chancellor Schröder, which greatly supported Germany's economic development. Agenda 2010 is a series of reforms by the then German government, a Social-Democrats/Greens coalition, which aimed to reform the German welfare system and labour relations. The declared objective was to increase international competitiveness, promote economic growth and thus reduce unemployment. These policies were economically successful, albeit eroding the middle class and thus laying the foundation for the rise of AfD, the new nationalistic / right-wing political party. Other European states, such as France and Italy trying to adopt this strategy failed due to union's opposition.

One more affected sector apart from internet: financials. US is likely having service surplus with China (investment banking and auditing). One can check the IPO sponsors of mega Chinese companies listed in Hong Kong in the past two decades. The sponsors usually consisted of China and US banks. For example, CLSA, GS and MS in The recent Xiaomi IPO. Discounting the divorce could be part of the reason why Financials underperformed while interest rate rising. PS: a recent incident of China AI propaganda reported by South China Morning Times (https://www.scmp.com/tech/big-tech/article/2165702/national-ai-champion-iflytek-dispute-over-automated-speech-translation) Quote: [It was an outright lie,” Wang wrote in his Zhihu post on Friday. “The day may come when AI can actually understand natural languages and we lose our jobs, but it’s definitely not now.”]

What's with the stale charts of 2,5, and 10 year rates? Looks like Raoul posted charts from a month ago?

Nice work.

as the 10y & 30y US yields have rallied through important levels (eg 30y now above the infamous 3.23%), is that now the rallying which would indicate the path to the next recession? if so, what is the historical context suggesting how far up it can go before reversing again (history does not repeat but it rhymes)? or is the current situation rather a usual seasonal pattern amplified by the dollar shortage that base swap and 3-mth forward hedging costs have substantially increased? I know many questions but I reckon that with yesterday's and today's yield move, we may have now entered a very interesting period

The current yield on the US 10 year Treasury is about 3.20 % . This takes it over the long term channel on the high side. Comments re earlier expectation of lower rates would be useful ?

Great piece on the US China relationship at the moment. Its really hard to see how this gets any better before it gets worse as they both think they have the upper hand.

comments on interest rates and TLT would be useful