Weekly Signal & Noise Filter
This ain't your momma's macro cycle
The holy grail of macro investing revolves around understanding the economic growth cycle and the subsequent policy reaction function to economic developments.
On November 1st, an affirmative policy decision was made by the U.S. Treasury Department to not torch the bond market with supply.
The above set off a repricing of the bond market and downstream risk assets which continued through last week, as the worst-case scenarios were taken off the table.
No doubt the Treasury decision was influenced by broader macro forces which redirected Treasury’s focus to economic slowing, restrictive financial conditions, and a cooling labor market.
The macro policy writing was on the wall and Treasury got the memo.
In order to front run the next policy response, we must explore the evolution of the macro cycle. Thus, the next data point to consider is the CPI report on Tuesday, November 14th.