Geopolitical risk is rising under Trump despite promises to the contrary, and combined with building reflationary pressures, it sets the stage for higher oil prices this summer. With the reflation theme still largely underpriced, we think now is a good time to lean into risk and accumulate exposure.
Oil is grinding higher despite bearish supply dynamics, while precious metals—from platinum to palladium—are breaking out of multi-year downtrends. With the US-China deal unlocking industrial stimulus and positioning still light, the stage is set for a broader reflation move led by commodities.
A US-China trade framework is (mostly) in place, but markets aren’t fully buying the narrative. Meanwhile, CPI looms, bond auctions approach, and both the UK and EU continue to underperform the US macro-wise.
Markets are treading water ahead of a potential US-China breakthrough, but reflation continues to build beneath the surface as we move closer to summer. This week’s bond auctions and CPI/PPI data offer a prime opportunity for bonds to set the direction higher, even with energy and shelter likely delivering one final soft CPI print before broader price pressures return.
While markets broadly agree that some sort of re-acceleration in inflation will happen over the summer, the ongoing liquidity boom—driven by the fiscal deficit and private credit creation—has gone under the radar, and it will likely lead to new cycle highs in risk assets sooner rather than later.
The ongoing vendetta between Trump and Elon will likely not alter the macro picture a whole lot, but instead serves as a clear signal that reciprocal tariffs are a policy for the past, and that the less challenged sectorial tariffs is the new black.
Markets have stopped punishing deficits, even as auctions stumble. With fiscal fears fading fast, the focus has flipped to growth—and risk assets are responding. Metals are ripping, the USD setup is shifting, and soft data might not be soft enough to keep the cycle crowd calm.
As geopolitical tremors from Ukraine to the Strait of Hormuz collide with a global trade thaw, markets are waking up to a new regime: strategic metals, defense stocks, and oil are back in vogue. The battlefield is shifting.
Steel tariffs might make headlines, but markets are focused elsewhere. With services stabilizing, trade flows rebounding, and copper breaking out, the real story is a quiet but powerful reflation pulse building beneath the surface—just as fund managers remain underweight risk.
Markets opened the week on shaky footing, but beneath the surface, global trade is quietly improving, freight rates are screaming reflation, and macro bears may soon run out of ammo. With ISM Services, the ECB, and NFP on deck, the next few days could reshape sentiment—and cement a summer of upside.
Markets are still underpricing the scale of the reflationary macro shift. Retail is all-in on the dip, but hedge funds remain stuck in doomsday mode. With CTAs cornered, tariff drama fading, and a reflationary tailwind building, the road to all-time highs may be clearer than most think.
The overnight court ruling disapproving Trump-era tariffs likely marks the end of the trade war, meaning assets need to reprice materially if no escalation follows. But if we know Trump, he’ll swiftly shift the narrative to the next battleground.
The fiscal relief seen yesterday is gone in an instant after another semi-nasty JPY Bond action. Meanwhile, growth and inflation are accelerating in tandem, bond yields are on the move, and CTAs are leaning the wrong way across sectors, rates, and FX.
Fiscal worries remain front and center—even as governments scramble to shift issuance down the curve. With inflation surprises rising and shipping data still stalled, risk assets need either a policy-driven jolt or an upside shock in growth to break out of their flatlining range.
What has happened in Japan over the past week is worth noting, with extreme flows out of the fiat system and the long end of the bond market. Here’s why it matters across asset classes, and why many cross-asset correlations have flipped.
While equities and bonds usually move in opposite directions, we may now be in a regime where both rise together. Fiscal concerns are driving bond yields higher—but with U.S. corporates sitting on record cash balances, broad equities may be less sensitive to yields than in prior cycles.
Long-end yields are breaking out, crypto proxies are flying, and copper is ripping higher. With PMIs turning and fiscal spigots open, risk assets are back on the menu—even as hedge funds cling to their bearish playbooks.
Copper is breaking out technically alongside other cyclical metals. And while there are plenty of compelling short-term reasons to be bullish on commodities, this is not the beginning of a new supercycle. Long commodities remains a tactical trade, driven by growth repricing and stretched positioning.
As growth and inflation begin to reaccelerate, hedge funds and CTAs continue to fight the cycle—doubling down on long bonds and short risk. The macro bears aren’t giving up without a fight.
With no major U.S. data releases this week, markets remain comfortably parked in Goldilocks mode—buoyed by easing financial conditions and hopes of a global rebound. But Japan’s disastrous bond auction and murky trade chatter hint at volatility brewing beneath the surface.
The economy is quietly reaccelerating beneath the surface—tariff impacts delayed, credit creation strong, and inflation expectations under control. With trade tensions easing and sentiment improving, the conditions are lining up for a return of the 2021-style goldilocks environment.
While risk assets have largely recovered from the Liberation Day slump, cyclical asset ratios are still pointing to ISM manufacturing levels around 45. Will markets be caught off guard if the U.S. economy is actually rebounding?
The bearish commodity stance is running on fumes, as the key drivers—trade barriers, a short-term USD repricing, and slowing growth—are all beginning to reverse. We’re likely staring into multiple trend shifts across asset classes. Position accordingly.
Both retail sales and inflation prints this week look incredibly soft relative to expectations—countering the recent wave of business cycle optimism following the new U.S.-China trade deal. But will the market even care about backward-looking economic data at this point?
No matter where you turn, strategists and analysts are calling the rally in risk assets overdone, arguing that the damage to the economy is already baked in. But as we’ve seen repeatedly, that damage keeps getting delayed by frontloading. And if trade deals are actually on the table soon (admittedly a big assumption), then the outlook is far more procyclical than what the IMF, Bloomberg, and others are currently expecting.
Markets are cheering early signs of global trade de-escalation, as priorities within the U.S. administration shift. Trade is rebounding—now the race is on to lock in deals before economic damage becomes permanent.
As container ships start moving again, the clock is ticking for Bessent and co. to strike trade deals before tariffs hit U.S. shores. But while global trade thaws, the Fed remains stuck in “wait and see” mode—risking a policy mistake if growth sours before they move.
Growth remains tilted to the downside in our global model framework, signaling that we’re not yet out of the woods in terms of weaker commodity prices. Gold stands out as the only true bull case in this environment, as uncertainty continues to roar—and even when global trade “reopens,” credit will be created in size to cover losses.
Markets are pricing in trade deals as Bessent travels to Europe to kick off bilateral talks between the U.S. and China—potentially the ultimate go-button for the global economy. But as always, such deals take longer than expected. Meanwhile, markets must first navigate geopolitical tensions in India/Pakistan and a Fed meeting later today before breaking out the champagne.
While a weakening U.S. economy remains the base case until immediate trade deals materialize, opening up global trade with oil prices below $60 per barrel could trigger a major cyclical boom by late summer. The current rally in risk assets looks like a relief bounce for now—but could quickly turn into something more persistent.