Understanding Markets

Key Catalysts US Dollar US Interest Rates vs Foreign Interest Rates US Growth vs Foreign Growth My thoughts The US dollar has been strong this year but it has begun heading down due to the slowing of the Fed's tightening cycle. The Fed is likely to slow its rate hike and eventually pause mid-next year. The reasons for this are US consumer price inflation eased more than expected in November Economic growth should slow as the rate hikes delivered this year by the U.S. finally begin to manifest their lagged effect on the economy Cost-push inflation is likely to ease as s upply chains are also finally normalizing as the world is getting back to normal following the pandemic, China reopening Global economic recovery, economic recovery in China benefit a whole range of different economies, emerging markets included will help push the dollar down The Case for Emerging Market Sovereign Credit We have seen emerging market sovereign credit fall precipitously in 2022 due to Rising U.S. real...

  Situation At the start of this year, I anticipated the inflation in the US to be persistent rather than “transitory”. With that view, I have purchased shares in the ProShares UltraShort 20+ Year Treasury ETF. I was right on my assessment and now with TBT returning more than 60% I only regret not buying enough. A lot has happened in the last few months. The Federal Reserve raised its target range for the federal funds rate by 3.75 percentage points since March. Russia invaded Ukraine. China remains locked down. It is time to reexamine my views regarding interest rates and inflation going forward, so I can reassess my positions in TBT. Interest Rates Fed Reserve Update The decisions of the Federal Reserve are the biggest driver of interest rates, which is one of the biggest drivers of inflation, so I’ll begin by examining the next steps of the US Federal Reserve.  Jerome Powell said in a speech at the Brookings Institute (insert date): It makes sense to moderate the pace of ou...