Welcome to our Monthly Macro Regime monitor.

Coming into March, we wrote that “We see little change to the optimistic and risk-favoring sentiment for March, and we thus remain in the goldilocks ‘Gung Ho’ regime. With tailwinds from both liquidity and growth, we continue to see a great case for continuing to move/stay further out of the risk curve when it comes to allocation. Especially as risk assets are not as sensitive to accelerating inflation as long as central banks remain stuck with an easing/”peak rates” bias, which we have continuously flagged and see increasing likelihood for.”, but when we take a look at the macro fundamentals for April, we see a worsening macro regime on the cards.

The macro environment is turning worse on both inflation -and liquidity metrics, while the growth variable remains positive (measured by the cyclical manufacturing momentum). This leaves us in a classic “QT” environment with less obvious “gung ho” risk taking through April compared to the full-on risk positive environment we have seen over the past 4-5 months as continuously flagged and traded via our allocation tools.

Chart 1: Macro regime for April: QT