The Great Reflation
In mid-late March, The MacroStrategy Partnership argued that the massive coordinated fiscal and monetary policy response to the covid lockdowns would, over time, drive a reflationary recovery in macro and markets. To date the reflation in markets has been narrow; there has been some risk-on, some dollar weakening, a strong performance from precious metals and a recovery in resources. But we haven’t yet seen the sustained sell-off in bonds and the outperformance of value vs growth that you would expect from a full reflation. This is down to five ‘circuit breakers’ that have prevented policy from fully powering a reflationary recovery:
- The logjam in passing a stage five fiscal stimulus in the US.
- The failure to draw down the Treasury General Account.
- The rise in US consumer savings.
- Fears that Trump will contest the election.
- Fears of a ‘second wave’ of covid in the Northern Hemisphere & persistence in the Southern Hemisphere.
Recording
Attachments
Speakers
About
The Macrostrategy Partnership, initially set up as AML Macro Limited, was founded in 2011 and transformed into the MacroStrategy Partnership in 2012. We provide cutting-edge independent research on global macro and markets, unconstrained by internal, external or political considerations, assisting our clients to make investment decisions. Between the three partners, we have over 70 years of experience in investment banking and/or fund management both on the Buy and Sell Side. Our team has a wealth of experience including areas such as derivatives, commodities and equities. We provide global coverage servicing clients worldwide.