Treasury yields, oil prices, and the yen carry trade are approaching critical levels, according to Vincent Deluard, Global Macro Director at StoneX. In a recent discussion, Deluard examined how these pressures could impact equities and discussed broader economic concerns, including US debt and European bond markets.
Macroeconomic Pressures and US Debt
Deluard noted that rising Treasury yields point to long-term dollar debasement. While he suggested that markets may hold up through the midterms and the Anthropic IPO, he cautioned that artificial intelligence capital expenditures cannot continue doubling indefinitely. He outlined plans to turn bearish on stocks following November.
The discussion also touched on daily tax collection data as a window into the US economy, as well as the question of whether artificial intelligence and robotics can help the United States grow out of its existing debt burden.
International Contagion and Debasement Hedges
The analysis extended to international markets, highlighting France's bond market crisis, ongoing debt problems, and the associated risks of Eurozone contagion. Deluard also pointed to the combination of the yen carry trade, oil prices, and Treasury yields as three signals currently reaching a breaking point.
Against the backdrop of potential future quantitative easing and long-term currency debasement, Deluard evaluated the outlooks for Bitcoin and gold as debasement hedges, outlining his perspective on Bitcoin's market trajectory over the next two years.
