Goldman Presents The Great “Fade” Trade

“This phase peaked at the end of January this year – we have entered a ‘reflation pausation’. We think this is the result of a combination of worries: (1) Disappointing hard data vs. soft data so far, in particular core CPI, (2) commodity recovery fading and base effect on headline inflation rolling off, (3) Trump optimism fading, (4) European politics moving into the hot phase, and (5) first signs of growth momentum slowing.”

“Petty” (And Pesky) Narratives

One day after warning that “frazzled” would be “the word of the month” for traders, Richard Breslow is back, and Wednesday’s missive finds the former FX trader warning on the dangerous of becoming too wedded to any one narrative and/or long-term view on markets. To be sure, Breslow’s “frazzled” call was proven correct just four hours…

“Hope Versus Reality”: Goldman Illustrates The Trump Trade Fade

“This week the market struggled to readjust its expectations for US government policy following the move away from health care reform. Client conversations make clear that investors fall into two camps: The first group worries that the failure to “repeal and replace” the Affordable Care Act is a sign that other items on the policy agenda are less likely to be enacted than they had hoped. Others are encouraged about the shift in focus to tax reform as the new top priority for the administration.”

Did Credit Investors Just Give Up On The Trump Agenda?

A couple of days ago in “One Word And One Word Only: ‘Duration’,” we noted that when central banks pull the punch bowl, you’d better not have your hand in the duration cookie jar. Here’s how BofAML explained things: US elections, the global reflation trade and rising political risk (Nov’2016 – now):Recently we have seen…

“Hope”: Health Bill Failure Isn’t Death Knell For Trump Trade, One Bank Says

We’ve said it before and we’ll say it again: one-way bets and crowded trades are inherently susceptible to getting caught horribly offsides when sh*t goes wrong. And although specs have trimmed 10Y shorts over the last two weeks (they cut around $7.4m/DV01 in the week ended Tuesday, the second straight week of pared bearish bets), eurodollar shorts are still…