Macroeconomic and Investing, The Macro Compass

Alfonso Peccatiello (Alf)

Macroeconomic and Investing

The Macro Compass

Actionable investment ideas and unique global macro insights. From the desk of a former Head of $20 bn Investment Portfolio straight to your inbox.

Actionable Investment Ideas

Macroeconomics

<ul>
<li>In the ‘80s, independent economist Yardeni coined the term ‘‘bond vigilantes’’ to refer to fixed income investors disciplining authorities for running inflationary fiscal and monetary policies and ultimately restoring order through the bond market.</li>
<li>In 2022, we are witnessing the first preliminary signs of the return of the global macro vigilantes</li>
<li>Amongst others, George Soros is an eminent member of this selected group of macro investors who challenge policymakers across countries and relentlessly chase regime-change narratives once they see a good opportunity</li>
</ul>


In the ‘80s, independent economist Yardeni coined the term ‘‘bond vigilantes’’ to refer to fixed income investors disciplining authorities for running inflationary fiscal and monetary policies and ultimately restoring order through the bond market.
In 2022, we are witnessing the first preliminary signs of the return of the global macro vigilantes
Amongst others, George Soros is an eminent member of this selected group of macro investors who challenge policymakers across countries and relentlessly chase regime-change narratives once they see a good opportunity


Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Provide Comprehensive Analysis & Commentary

SAV Markets

SAV Markets aims to provide comprehensive analysis & commentary on foreign exchange and asset markets. The approach is multi asset as markets are typically interlinked. Cause and effect are always at work, even if those effects take time to manifest. As nothing is permanent we strive to get ahead of the curve in an ever changing world.

Technical Analysis

<ul>
<li>Latest price action showing a daily reversal at the high on the S&amp;P 500 Future warns of another correction</li>
<li>The rise in US yields (2y &amp; 5Y) cannot be ignored and the wider market must get used to this new path of least resistance</li>
<li>We also have negative divergence developing on the S&amp;P 500 daily chart – it is a tired looking market</li>
</ul>


Latest price action showing a daily reversal at the high on the S&amp;P 500 Future warns of another correction
The rise in US yields (2y &amp; 5Y) cannot be ignored and the wider market must get used to this new path of least resistance
We also have negative divergence developing on the S&amp;P 500 daily chart – it is a tired looking market


Cross Asset Strategy

This note follows a previous one called <a href="https://www.smartkarma.com/insights/the-major-turn-in-bonds" target="_blank" data-smartkarma-citation="insights:58132" rel="noopener">The Major Turn in Bonds</a> which looks at the prospect of rising US yields, particularly at the belly or the long end of the curveRising yields from here are likely to lead to steeper curves which typically assists, or encourages, credit and lending by the financial community - a needed ingredient for for economic expansion / recoveryThese charts go a small step further and identify the price action signals that have now emerged from those sectors.

This note follows a previous one called The Major Turn in Bonds which looks at the prospect of rising US yields, particularly at the belly or the long end of the curveRising yields from here are likely to lead to steeper curves which typically assists, or encourages, credit and lending by the financial community - a needed ingredient for for economic expansion / recoveryThese charts go a small step further and identify the price action signals that have now emerged from those sectors.

<a target="_blank">Markets across the board appear to be returning to a reflationary stance, especially now that we have finally seen some decent activity in US Treasuries.</a>Considering Oil is making new trend highs and the worse-than-expected data in the US already likely to be behind us, it does appear that the catalysts for a turn in Bonds are in place. US 10Y yield looks likely to make it to 1.70% while 30Y yield to at least 2.26% if not 2.40%+ again.Longer-term charts that look at the US yield curve and estimate how steep it can go. These charts suggest that we could be on verge of a very significant uptrend in yields that takes us far beyond the highs posted earlier this year.

Markets across the board appear to be returning to a reflationary stance, especially now that we have finally seen some decent activity in US Treasuries.Considering Oil is making new trend highs and the worse-than-expected data in the US already likely to be behind us, it does appear that the catalysts for a turn in Bonds are in place. US 10Y yield looks likely to make it to 1.70% while 30Y yield to at least 2.26% if not 2.40%+ again.Longer-term charts that look at the US yield curve and estimate how steep it can go. These charts suggest that we could be on verge of a very significant uptrend in yields that takes us far beyond the highs posted earlier this year. 

Thematic (Sector/Industry)

Recent developments on the S&amp;P 500 Banks Index warns of further short term losses of more than 6% from current levels. The flattening of the US curve has likely played an important role here and that curve flattening may not be over quite yet.

Recent developments on the S&amp;P 500 Banks Index warns of further short term losses of more than 6% from current levels. The flattening of the US curve has likely played an important role here and that curve flattening may not be over quite yet.

United States

Legacy Government (Sovereign) Generic Index-key ticker

US 2Y (USGG2YR INDEX)

The Macro Vigilantes Are Waking Up

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The Major Turn in Bonds

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S&P 500 Banks Index Breaks Key Levels

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