- "With the financial market summer behind us, investors are looking ahead to an important few months. Macro returns have been poor, judging from most industry indices. Yet the landscape at present seems to offer an attractive mix for making up lost ground. Net speculative positioning across financial markets appears mixed at best; our CFTC positioning indices suggest speculative positioning has increased in the past month and is broadly positive risk – i.e. long commodities and short USD – but our separate hedge fund positioning analysis suggests this, often market-moving, group is very negative risk, holding shorts in stocks, longs in USD and longs in rates (Macro Chart Alert – Macro hedge fund pessimism, 01-Sep-2010). More important, we appear to be at a major inflexion point for the global economy. For much of this year, the main macro debate had centred on when G4 central banks would begin to normalise the super-easy stance of monetary policy. But over the past month, the tide has turned. Having effectively “eased” policy at its 10 August meeting by committing to sustain its balance sheet at current levels, our economics team now expects the Fed to announce outright balance sheet expansion this autumn (see Bernanke provides a call to action). The BOJ followed up quickly, announcing additional (admittedly modest) policy easing measures at its emergency meeting last week. Finally, the ECB confirmed it will maintain its “full allotment” policy of liquidity provisioning into 2011, even as it hinted at upside risks to its inflation forecast for the coming months."
- "To be fair, core G4 bond markets have moved rapidly to price in this new policy environment – so much so that our rates strategy teams are increasingly uncomfortable with the risk-reward of long duration position. That said, as we look across global financial markets, we still see plenty of opportunities to capture this shifting macro backdrop. In our latest Thinking Macro, we highlight three strategies for trading the shifting policy trends in the next few months."
- "To be fair, core G4 bond markets have moved rapidly to price in this new policy environment – so much so that our rates strategy teams are increasingly uncomfortable with the risk-reward of long duration position. That said, as we look across global financial markets, we still see plenty of opportunities to capture this shifting macro backdrop. In our latest Thinking Macro, we highlight three strategies for trading the shifting policy trends in the next few months."
Nomura Thinking Macro 20100907
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