A tweet by Robin Brooks: "Brazil's trade surplus remains in the stratosphere
There is no other EM that has transformed itself over the past decade in the way that Brazil has. The sharp rise in US interest rates is currently weighing on Real, but that's temporary. The massive trade surplus is permanent..."
Is China to blame for the rise in US long rates?
China has cut its holdings in US Treasuries to $822bn, lowest level since 2009. Beijing has been selling $300bn in Treasuries since 2021, & pace of Chinese selling has been faster in recent months, Apollos's Slok has calculated. Source: HolgerZ, Bloomberg
Incredibly, ultra long-duration Treasury bonds have now lost more in % terms than stocks did during Great Financial Crisis
The drawdown in extended duration Treasury ETF ( 58.3%) now exceeds PEAK-TO-TROUGH losses in S&P 500 during stock market crash of 2007 - 2009 (56.0%) Source: Jack Farley
Q4 has easily been the strongest quarter of the year with an average gain that is more than twice the average of Q1 and Q2
Source: Bespoke
Hedge funds have now built the largest short position in U.S. Treasuries in history
Source: DB, barchart
The new safety trade
-> An incredible $993 billion has gone into money market funds since the Fed started raising rates in March 2020. Inflows to money market funds are well ahead those seen in 2015, 2004, 1999 and 1994 rate hike cycles. Why take risk on your "safety" trade when you can make 5% risk-free? Source: The Kobeissi Letter
On a growth-adjusted basis, the mega caps trade at the largest discount to the median S&P 500 stock in over six years
Source: TME, Goldman Sachs
New home buyers in the US
Source: Michel A. Gayed
