Tightening Liquidity Is Deflationary, Starting To Add Treasuries

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Last week, markets continued to price tightening liquidity conditions, but now with a deflationary tilt. The Dollar continued to power ahead, alongside US Treasuries. Equities and Commodities suffered significant losses, telling us that markets were moving aggressively toward pricing in falling growth expectations. Markets were particularly focused on the further deterioration in economic data, something our systems have been well ahead of in this economic cycle.

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