10Y dollar

Chart Check Double Feature (Reflation Nation)

Time and again I’ve emphasized the importance of watching cross-asset correlations and positioning data as barometers of the “Trump trade.”

Essentially what you get by observing these correlations and by checking up on CTFC positioning is a running referendum on the extent to which the market is still buying the reflation narrative.

In correlations: +correlation between stocks, rates, and USD = reflation on. Anything else = narrative wobbling (subject of course to any number of contingencies including whether dollar strength is performing its new role as reflation cheerleader or its more traditional role as a drag on commodities and thereby on breakevens).

In positioning: short USTs, long USD = reflation on. If those positions are meaningfully trimmed = narrative wobbling.

With that in mind, consider the following set of charts from Goldman.



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