Tightening Liquidity + Stagflation
Equity markets continued their descent last week; however, commodities and treasuries sold off alongside equities. Our systematic lenses qualify these moves as indications of tightening liquidity, i.e., an environment where cash outperforms risk assets. Consistent with this fundamental thinking, the dollar was the best performing macro asset last week. These moves took place alongside the Federal Reserve moving to hike interest rates by 75 basis points, an incremental tightening whose size we haven’t seen in decades.
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