FATT News and Press, Fat Tail Risk ETF From 09/29/21

The rates market sell-off has extended, albeit losing some steam. While the GBP inflation narrative grabbed the headlines, USD rates dynamics indicate it is more a repricing of monetary policy. Only the ECB is distancing itself from the hawkish turn, at least with some success as ...

The Evergrande saga continues to dictate daily ups and downs in the rates market. Government bonds benefit from safe haven demand despite stagflation fears and the risk of central bank response, but these haven’t disappeared. USD and GBP curve flattening seem like the most ...

We remain pro-risk and opt to look through any short-lived volatility that could result from a battle over lifting the U.S. debt limit and funding the government. U.S. consumer price increases slowed in August, but inflation pressure has broadened to core items less affected by the pa...

Regardless of what happens with the economy and bonds over the rest of the year, we are nearing peak exuberance in stocks. Most people fear that a slowing economy will be the trigger for a stock market selloff, but that may be the wrong worry. Bear markets are generally associated wit...

The language being using to describe this market is "frustrating, but not fatal." The headline indexes have continued to grind higher, but this is a market that has been correcting, consolidating, and churning under the surface for most of the summer. The idea of an economic “g...

How to achieve a respectable income without taking on too much risk. What's the right risk/yield trade-off for reasonable income? Will '80s-style inflation return? For further details see: The Great Fixed Income Challenge: Balancing Yield And Risk In A Low-Rate World

Developed market yield curves are displaying late-cycle dynamics. This is nowhere as obvious as on the GBP curve as hikes are being brought forward, and as the curve flattens. This makes it all the more difficult for long-end rates to rise. For further details see: Rates...

The lower-than-expected CPI pushed US rates back into the driving seat, taking Bunds for a ride. We are also watching hawkish ECB risks that could potentially narrow the UST-Bund spread. We think such tightening is more likely to be temporary and is more inclined to follow the ECB...

In addition to battery element shortages, the chip shortage has limited electric vehicle production. At the auto show in Munich last week, several auto executives commented on the chip shortage. Overall, the electrification of vehicles may be characterized by perpetual shortages for y...

The ECB is looking through higher headline inflation and inflation swaps. We doubt these will be enough to change easing expectations in December, but hawkish comment risks will remain a threat to carry trades. In the US, inflation prints have not affected breakevens much in recen...