Pro Macro: Are We There Yet

Published on: March 28th, 2023

In his latest Deep Dive, Julian looks at how recent events have radically changed the macro outlook and sets out an updated macro “roadmap” for investors. The Fed had been trying to slow the US economy but, as with many cycles, it was the financial system that broke first. The problems in the banking system have undermined trust in credit. Julian argues that the Fed will try to restore trust in the system, but that it’s always difficult to put all the credit “toothpaste back in the tube”.


  • KH
    Kavi H.
    28 March 2023 @ 19:57
    Thanks for the great Deep Dive Julian. Just wanted to ask your opinion about a concern I have with having a heavy bond position: The TGA is almost through, which means (to my understanding) that the debt ceiling will need to be raised in the next few months. When the debt ceiling does get raised, couldn't that potentially cause another round of selling in Bonds as there will need to be significant issuance to replenish the TGA and also just cause general sovereign debt worries like we experienced in the UK last year? Thanks Kavi
    • HM
      Harry M. | Real Vision
      31 March 2023 @ 12:57
      Yes thats true. But if the overall economy is bad enough the supply issues wont matter. They seldom do.
  • SR
    Steve R.
    28 March 2023 @ 22:38
    Do you think there is any risk to the bond trade if the Japanese change their policy towards YCC and allow the rate to rise triggering a flight away from US bonds back to JGBs for Japanese investors?
    • HM
      Harry M. | Real Vision
      31 March 2023 @ 12:59
      I think Julian's view is that the curve can steepen a bit but that the dollar would probably take the bulk of the strain if the Japanese were to allow yields to shoot higher. Japanese investors would repatriate capital.
  • JL
    J L.
    5 April 2023 @ 07:30
    with 125bp of cuts priced again between SOFR23 an SOFR24 (!?) it would be great to get an update on whether this is looking interesting again to MI2