Inflation/Deflation

As the major central banks once again mull their policy options, they face a daunting task. They must phase-transition inflation back to imperceptible, without phase-transitioning unemployment to perceptible. This report explains why this will prove impossible, and what central banks will likely prioritise. Plus: the collapsed complexity of the recent stock market rally signals excessive trend-following. Until the complexity normalises, we are reluctant to chase the rally.

This Strategy Insight discusses the bond market and currency implications of the Fed’s “hawkish pause”.