Last Week the Fed made its first 25bp Interest Rate Cut = Gradual Easing Cycle For Interest Rates and more monetary easing for the foreseeable future. We should go from a Bear Steepener to a Bull Steepener in Q4 2025!
Systematic beats discretionary: Data-driven, rule-based macro strategies are outperforming traditional "gut feeling" approaches by using econometric models (ARIMA, GARCH, VAR) to identify regime-dependent opportunities and reduce behavioral biases in decision-making.
Current opportunity: The Q2 2025 environment (twist steepening yield curve + easing US-China trade tensions) systematically favors cyclicals (energy, materials, industrials) over rate-sensitive (utilities, REITs), creating cross-asset relative value trades.
AI-Enhanced evolution: Integrating machine learning with traditional models, alternative data sources (satellite imagery, credit card data) and deep reinforcement learning to capture more complex patterns that human discretionary traders miss.
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