Central banks could create problems if they tighten monetary policy, and potentially even bigger problems if they don’t.
If the Fed, ECB, and BOJ tighten, stock investors could face increased volatility. If they don’t, bond investors could face mounting pressure as policymakers risk sacrificing long-term credibility for short-term economic wins.
Making matters worse, global demand for capital is overwhelming supply, potentially adding even more pressure to sovereign bond markets worldwide.
Treasury Secretary Scott Bessent recently declared, “I am the house now,” while discussing his resolve to strengthen the Japanese yen. But in our view, Bessent may not be “the house” at all, he may simply be another player in an increasingly high-stakes game with the global bond market.
What happens if policymakers make the wrong move, and is your portfolio prepared for the volatility that could follow?
Stop guessing what central banks will do next, and the effect any pivots will have on your portfolio.
Explore 42 Macro for systematic research solutions today.
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