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Insight - Making Sense of the Narrative


A new government and a crisis mini-Budget are perfect catalysts for macro traders to double down on existing large and already highly profitable strategies and to produce persuasive narratives to back it up. Thus, going into month and quarter end...

Bringing together our series on Model Portfolios, we show how a balanced 60:40 Portfolio of Equities and Bonds based on our Global Bond Model Portfolio combined with either our Global Equity Factor Model Portfolio (Portfolio 1) or our Global Equity Theme Model Portfolio (Portfolio2) show different risk return profiles, but both show better returns with much lower risk than the benchmark.

A little noticed (by most) statement came out in early July – effectively the day of Boris Johnson’s resignation – from an unusual source, a joint press release by Britain’s MI5 and the US FBI. The statement was on China and essentially stated that the biggest threat the UK faced was from Chinese competition

The world of FX reserves has been upended over the freezing of Russia’s assets in a way not seen since Nixon closed the Gold Window in 1971.

FX markets always have a narrative. Right now the obvious one is that strength of the $ can be attributed to a simple relative interest rates model, so it’s all about the Fed. But they may also be telling us that the spike in prices is less worrying for markets than the spike in volatility which is forcing deleveraging across fixed income and alternatives – and thus the bid for $ may reflect distress.