MacroResearchBoard

DM Central Banks: Pro-Growth And Pro-Risk – September 30, 2024

A just-published report updated our absolute return positions in the MRB TradeBook, which remain mildly pro-growth and pro-risk.

Global monetary conditions have not been restrictive as is generally believed. Nonetheless the major central banks are providing additional reflation and have signaled that a lot more looms. The result will be a significant extension to the Goldilocks environment for risk assets that began with the Fed’s dovish pivot last October, at least until bond yields rise anew.

We continue to favor corporate bonds and select equity markets. However, we also added short positions on U.S. Treasurys which are now priced for a weaker growth and lower inflation backdrop than is likely to develop.