All-time highs are often telling macro signals. Is it possible there might be a connection between the recent ATHs in Bitcoin and long JGBs? Some reports pointed to the US credit downgrade and Trump’s tax bill igniting fiscal worries. First of all, no macro trader ever sold a bond because of a credit downgrade and second, given S&P and Fitch had downgraded long before, it’s very hard to think of it as a surprise. So ignore the rating nonsense and just focus on the deficits. The issue is the scale of public sector deficits relative to private sector savings, and it’s hardly a secret. Some might pretend that the problem is specific to the US, but it isn’t, and that just makes the problem bigger. Government deficits are high all over the developed world, reflecting adverse demographics, internal political division, and ongoing geopolitical arm-wrestling.
SUBSTACK LINK: https://mi2partners.substack.com/p/thoughts-from-the-divide-all-time?r=1tabqm