Hello everyone, and welcome back to our weekly portfolio watch.

A slightly positive week for our macro portfolio, which after a couple of days of sell-off in equities have gained ground again after the FOMC meeting Wednesday, revealing the Fed’s intend of lowering the monthly redemption cap on USTs from USD 60 bn. to USD 25 bn. from June, countering the net-negative liquidity impact of the US treasury issuance profile. 

The slight dovish narrative is back in market pricing, and the mix of dovish central bank vibes and added liquidity will likely rule markets in the coming weeks, as economic data from the US will continue its run. Today’s NFP report speaks in favor of the dovish narrative, with markets using the weaker report to fuel further rate cut hopes. The report alone moved market pricing around 0.5 cuts (From 1.6 cuts in 2024 to 2.1 cuts after the report) – positive risk assets!

We entered a Nasdaq bet recently and look to keep it on our books as long as the liquidity outlook remains positive. The softness in NFP is most probably a strong hint that the FCI loop will be allowed to continue, which is what we have been arguing over the past 1-2 weeks. This is unlikely to work wonders for the inflation combat, but Powell seems satisfied with a “reflationary” outcome for now. 

Chart 1: Cut-hopes are back