Heisenberg Macro The echoes of "peak hawkishness" have been around since the January Fed meeting. However, the Fed rhetoric has continued to ratchet up as inflation data has continued to run well ahead of their expectations and Ukraine war and China lock-down have skewed the risks to inflation further to the upside. The market has gone from pricing a benign Fed cycle at the beginning of the year to one that is expected to overshoot Fed's estimate of neutral.
Given your view where do you see the $USD going? DXY at 120 and EURUSD well below parity? Inflation and growth dynamics in RoW point in the opposite direction. Absent another exogenous shock like covid I really struggle to see how Europe and Asia can match the US over the next 2 years.
Really great analysis, thanks!
Given your view where do you see the $USD going? DXY at 120 and EURUSD well below parity? Inflation and growth dynamics in RoW point in the opposite direction. Absent another exogenous shock like covid I really struggle to see how Europe and Asia can match the US over the next 2 years.