Weekly Macro Themes - Recession is likely bullish for bonds
This week I covered the following topics:
1. Treasuries: There are multiple mixed macro signals for bonds, but what we can know is they are cheap, sentiment is bearish, and while inflation risk is an issue; recession (if happens) is likely bullish for bonds.
2. EM Fixed Income: Remain bullish given cheap valuations, mild reset in sentiment, bullish EMFX outlook (and weaker USD), monetary policy tailwinds (albeit mindful/vigilant on inflation resurgence risk).
3. Energy Stocks: Continue to see upside risks for crude oil (and cheap energy stocks), but the risks are more 2-way now (e.g. global growth downside may swamp geopolitical risk upside).
4. Gold Miners: Move tactically neutral on gold miners given the risk signals in gold (overvalued, volatility spike, sentiment/positioning peak), and troublesome technicals for miners +rapid move in valuations.
5. Agri: Remain vigilant of upside risks in agri commodity prices as investment in supply softens, weather indicators on the move, sentiment/positioning complacent; all set against an underlying uptrend.
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