1. 2Y UST – Macro Says Yields Are Too High
2. Cyclicals vs. Defensives - Mispriced Risk?
3. GoldMiners: Liquidity First, Macro Second
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1. 2Y UST – Macro Says Yields Are Too High
Spot has run 18bps beyond macro fair value. Energy is the culprit, but the dual mandate may be the cure.
On the eve of conflict in Iran, 2y UST yields fell to 3.38%, their lowest in almost 4 years. Four weeks later they’ve re-priced 50bp higher.
Qi’s model value for 2s has also risen in that time, but only by 20bp. Crude oil is the biggest positive driver along with rate volatility & spreads. But other factors - notably weaker tracking GDP - have offset.
The result is macro fair value sits at 3.69%. That means spot has moved ~18bp further & faster than macro conditions justify. That’s a +1.3σ Fair Value Gap.
That would be sufficient to trigger a bullish signal but the caveat is model confidence. It’s rising but, at 40%, still sits well below our threshold for a macro regime.
So no official signal but, for contrarians who feel a Warsh Fed could prioritise the growth aspect of the dual mandate, a potential call to arms.
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