Narratives are what drive markets these days. There are plenty around. Reserve currency status, de-dollarisation, debt rollover risks, fiscal situation, tariffs, central bank independence, just to name a few. The thing about market narratives, especially when dealing with so many at the same time, is that it invites tourists to play the game. I am hearing of equity guys shorting the USD or engaging in yield curve steepening trades because that’s, well, the prevailing narrative. Typically, tourists get burned.
Generating profitable P&L streams over time requires a thorough investment process, while acknowledging how much prices have already been factored in. It’s trading, both the long- and short-term. That’s why we employ longer-term strategic macro ideas through our allocation models and roadmap, and pair them with our break-out and reversal models. This week, quite a few reversals are building and in play, which subscribers should be aware of.
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Macro D has opened his thoughts on FX trades he likes. You will find his latest Trade Corner piece below. There is another one coming up tomorrow.
Trade Corner
Macro D has provided us with profitable FX trade ideas in his favourite macro asset lever last year. He is now sharpening his pencils to share his latest thoughts and potentially attractive setups with our readers.
Let’s now examine a few of the reversal signals flashing (I have alluded to some in ATW already). Are narratives changing? Or simply prices fluctuating? Why does it coincide with more sanguine remarks by Bessent, who spoke at a closed JPMorgan event, that the current situation is unsustainable and a de-escalation is likely?
Let’s explore.
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