Month: January 2023

The Bank of Japan’s (BOJ) yield curve control (YCC) policy may be scrapped in the near future, but it is not our primary forecast. The reasons for this include: (1) the difficulty of maintaining low long-term interest rates amid global upward pressure on rates; (2) the unexpected policy change on December 20, 2022 (the increase in the cap on 10-year interest rates), which indicates that the BOJ recognizes inconsistencies in YCC; and (3) the possibility of increased distortions of the yield curve due to speculation about YCC’s demise. We anticipate that the next BOJ governor will be chosen between late January and mid-February. We present four potential scenarios for the future of BOJ policy: Scenario 1: No change in policy at Monetary Policy Meetings… Read more

As we enter 2023, 14 years post-Global Financial Crisis (GFC), it’s clear that macro investing is as relevant as ever as investment strategy. In fact, it will likely be even more important in 2023. Historically, many people thought of macro as an outlier strategy that they didn’t really need to think about, but the GFC made it clear that this is no longer the case. Looking back at 2022, there were three main things we tried to focus on in terms of macro. All three of these remain important for 2023. For 2023, our outlook is all about fixed income and credit versus equity. In 2022, we saw brutal conditions in credit, with rates rising and spreads widening to levels we haven’t seen in… Read more