This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
Why Is Gold Rising? (A Wealth of Common Sense, 5 min read) First, real interest rates are falling – since 2008, the correlation between gold and real rates has been -0.5. Second, we have dollar weakness – between 1974 and 2019, the dollar was down 15 out of the 26 years, and during those years, gold’s average annual return was 18%. Finally, investors could be using it as an inflation hedge – when inflation in the US was over 3%, the average return on gold was 10%. [Bullish Gold]
The US dollar comes up smiling (The Expert Investor, 3 min read) Jen reiterates his dollar smile thesis. He argues that recent dollar weakness is temporary, and US growth out-performance will mean the dollar bounces back. [Bullish dollar]
From Bond Glut to Bond Drought: A Strategic Fixed Income View (Janus Henderson, 6 min read) After the $1.2 trillion of corporate bond issuance since 2020 (up 95% versus 2019), Henderson see lower investment-grade net issuance in H2 2020. They believe companies will be more aggressive in managing their ratings and leverage levels to ensure they qualify for central bank-backed bailouts in the future. [Bullish credit]