Capital Flows: Interest Rate & FX Strategy

The Interest Rate Complex: Risk Reward Across the Curve, Inflation Risk, and Curve Regimes

Capital Flows — Thu, 14 May 2026 19:49:02 GMT

Today James and I walked through the full interest rate complex, the risk reward of rates across the curve, inflation risk by tenor, and how curve regimes connect directly to equities. Hyperliquid is bid on Coinbase, capitulating to the protocol via the AQA V2 announcement. PURR is up roughly 20% on the day, and Oracle is hitting new highs. Real rates on the long end are at the upper end of the range, while real rates on the short end are 30bps from negative, and the entire stack of rate signals is pointing toward the credit cycle melt-up extending.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. The rate complex is the operating system of every other market. There is no single interest rate. Fed funds, SOFR, the 2 year, 5 year, 10 year, and 30 year each price a different question and transmit to different parts of the equity complex, the economy, and FX. SOFR and Fed funds price what the Fed will do. The 2 year prices the policy path with marginal duration. The 5 year is the belly hinge between policy and term premium. The 10 year and 30 year are pure duration. Read them as one system or you miss the actual signal.

2. Coinbase capitulating to Hyperliquid via the AQA V2 is the structural tell that PURR added to the US is coming this month. Coinbase ignored Hyperliquid for years, and the AQA V2 announcement with Circle’s commitment to deploying USDC on Hyperliquid is a functional capitulation. PURR is up roughly 20% on the day and Hyperliquid is finally diverging higher from Bitcoin. The setup is not priced in yet..

I have been laying out the PURR thesis for months now here:

3. SOFR contracts are pricing 12bps of hikes between now and December 2027. That is the entire forward curve. The Z6 and Z7 contracts have moved from pricing cuts to pricing marginal hikes as inflation swaps tick higher. The Fed is not actually going to hike. They are going to pause into this, which forces real rates lower. The mispricing in the forward curve is the trade. Watching SOFR alone tells you what the entire rate complex is doing because every other rate is downstream.

4. The 30 year nominal is at 5 percent, the 30 year real is at 2.5 percent. Both are at the upper end of their multi year ranges. Despite that, REITs are barely off all time highs, homebuilders are holding levels, and the broad equity complex is at new highs. This is the cleanest tell that the system is not breaking under restrictive rates. The 30 year is doing what it does, and the economy is absorbing it.

5. Short end inflation swaps are higher than long end inflation swaps. The 1 year is at 3.3, the 30 year is below it. That curve shape tells you the market is pricing the current inflation impulse as a near term phenomenon and not a structural repricing. If crude continues to bid and core CPI starts transmitting, the 2s10s inflation swap curve will steepen further. Watch that curve. When it turns inverted to negative, that is the early warning for a bigger inflation cycle.

6. The fact that interest rates are rising and equities are not falling is the cleanest tell of resilience. The system is taking direct rate punches and not moving. XLI, XLF, and the small cap IWC are all holding new high territory while the long end is at the upper range. Industrials, financials, and small caps are the three rate-sensitive complexes, and all three are bid. That tells you the underlying economy can withstand much higher rates than the current setup implies.

7. Real rates are driving the short end. The Fed is choosing inaction into the inflation impulse, which is mechanically the liquidity mechanism. The attribution analysis on the 2 year shows inflation expectations driving the recent move up, not real rates. The Fed is not taking an active stance. They are letting it run. That inaction equals real rates falling, which is the engine of the credit cycle melt up. Once real rates print negative on the 1 year, the next leg activates.

8. The IWC small cap ETF rallying while rates rise is the signal you do not want to short equities. Small caps have the highest sensitivity to the underlying economy and to financing costs. When they rally through a rate impulse, growth is structurally stronger than the rate move can offset. Combined with industrials and financials holding new highs, this is the cleanest cross sector confirmation that the credit cycle is intact.

Slide Deck and Playbooks

Here is the slide deck from today’s livestream:

Capital Flows Livestream 2026 05 14

11.7MB ∙ PDF file

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Tomorrow's Livestream: Weekly Wrap: Positioning, Volatility, S&P Levels, and Sector Rotations Post Trump-Xi

Tomorrow, Jaymes and I will do the weekly wrap. We pull together everything we covered this week and connect it to positioning and volatility, then map specific levels in the S&P 500 and the sector rotations, setting up as the Trump-Xi meetings in China reshape the cross-border flow framework.

TOMORROW’S LIVESTREAM: LINK

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FX Drivers, AI Flows, and Sector Flows on a Cross Border Basis

Capital Flows — Wed, 13 May 2026 04:11:22 GMT

Today, I mapped FX drivers, AI flows, and sector flows for every major country on a cross-border basis, and walked through why today’s CPI print is creating a small intraday pullback that does not change the structural setup. The first Hyperliquid ETF (THYP) launched today, which actually strengthens the PURR thesis rather than weakening it. Inflation swaps are rising, crude is bid, and bonds are dragging on equity multiples just enough to flush weak hands before the next leg.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. AI is both an input into macro liquidity and operating within macro liquidity. Treating AI as just a symptom misses the entire flow. AI is retooling the production function of the economy at the same time as it is functioning as the largest cross border capital flow of 2024-2026. People who only model central bank balance sheets are missing the actual driver because AI capex is changing the speed of capital deployment in a way that no traditional liquidity index captures.

2. The first Hyperliquid ETF (THYP) launched today. This is bullish for PURR, not bearish. Regulators allowing the ETF tells you the regulatory path forward is clearing. PURR is no longer the only access point, but PURR has tools an ETF cannot match: share issuance and buyback optionality, a credit facility, and the leadership network to bridge centralized and decentralized players. The bar is now higher for PURR leadership, but the optionality is larger.

3. PURR leadership’s job now is to provide value in excess of the underlying token, which an ETF structurally cannot do. Every other treasury company in crypto has only diluted shareholders at the expense of long term holders. PURR has actively bought back shares when trading at a discount, which is fundamentally different. With the credit facility, the leadership network, and the TradeXYZ validator partnership, PURR can stack returns on top of spot hype that an ETF cannot replicate.

4. AI capex is the single largest cross border capital flow of 2024-2026, and where it lands dictates every other macro variable. Foreigners are bidding US mega cap tech because the US is the center of the AI infrastructure build out. That cross border flow is why US equity valuations are at all time highs in human history while every other major equity index has underperformed. Stop treating AI capex as just a sector flow. It is a macro flow.

5. FX will signal the next bear market before equities do. Foreigners are buying US mega caps without hedging dollar risk because they assume the dollar will stay strong. When the dollar falls enough to drag on their returns, they have to sell US equities to repatriate. That is the same mechanism that drove the 2025 tariff shock. Watch the DXY and the cross currency basis for the early signal.

6. Every country’s impossible trinity position forces pressure out of a different pipe. US: open capital plus floating FX plus AI capex absorbs flows into mega cap tech. Japan: open capital plus yield curve management plus Ministry of Finance spending forces FX as the release valve. Europe: open capital plus restrictive ECB plus short energy means the equity sectors absorb the pressure through underperformance. China: closed capital plus fixed FX forces the trade balance to absorb everything.

7. CPI came in hot on headline, contained on core. Inflation swaps are rising, which is exactly the setup that drags bonds and pulls equity multiples just enough to shake out weak hands. Equities down marginally after a 17 percent rally is not a market in trouble. It is a healthy washout. The CPI print does not change the structural thesis. Crude bidding plus inflation expectations rising plus the Fed pausing is the exact transmission that keeps real rates falling.

8. Crude is the swing variable for the next two weeks. If crude breaks down, the biggest short squeezes set up in DAX, Euro Stoxx, gold, silver, and copper because those are the assets most leveraged to the energy import structure. If crude continues bid, you get continued range trading in equities with the long end dragging on multiples. Either path is bullish at the structural level. The timing is the question.

Slide Deck and Playbooks:

Here is the slide deck from today’s stream:

Capital Flows Livestream 2026 05 12

5.63MB ∙ PDF file

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Tomorrow's Livestream: Mapping Macro Liquidity and How AI Is Changing the Transmission Mechanism

Tomorrow, I will map where we are in macro liquidity right now and walk through why AI is changing the transmission mechanism dynamics. Traditional liquidity indexes miss the actual flow because AI capex is now retooling how capital is deployed through the system. I break down the real liquidity framework and what it means for positioning.

TOMORROW’S LIVESTREAM: LINK

The Impossible Trinity Behind the Melt Up

Capital Flows — Tue, 12 May 2026 01:55:59 GMT

Today, Jaymes and I broke down the impossible trinity framework that sits underneath the entire credit cycle melt-up. Every country can only control two of three variables: independent monetary policy, capital mobility, and FX stability. The US has open capital, sovereign policy, and a floating dollar, which means the rest of the world’s flows recycle into US assets.

(Paid subscriber section is at the bottom of this report)

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. The impossible trinity is the framework that ties every macro move together. Every country can only run two of three: independent monetary policy, capital mobility, and FX stability. China caps capital and FX, which forces its trade balance to absorb everything. The US runs open capital, sovereign policy, and a floating dollar, which only works because the dollar is the global reserve currency. Every other country sits between those two extremes and is functionally cross collateralized with the US.

2. The US is the center of every other country’s impossible trinity. That privilege creates dependency on the rest of the world to recycle dollars back into Treasuries or US equities. The Fed’s reaction function is the global cost of capital benchmark. Treasuries are the safe asset that every other country’s capital flight runs toward. When the Fed pauses into inflation and lets real rates fall, every other country has to react, which is why the entire global rate complex is moving in correlation right now.

3. Japan capped two pipes with yield curve control and the yen took the full load. That is why the dollar yen moved from 100 to 160. When you constrain rates and keep equities calm, FX is the only release valve. The Nikkei is now valued above its 1980 market cap to GDP levels because Ministry of Finance spending is replacing yield curve control as the main mechanism. The yen is going to be where the next major unwind shows up, but we are not there yet.

4. The dollar is going to keep falling until the returns on the dollar drag on foreigners enough to force selling. Everyone is structurally long dollars because they assume they can always get them from the Fed or from trade. If the dollar falls fast enough, foreigners have to sell US equities to repatriate, which is the same mechanic that triggered the 2025 tariff shock. We are not at that level yet, but it is one of the two scenarios that ends the melt up.

5. The other scenario that ends the melt up is long end rates blowing out and delinquencies rising in the AI sector. Most of the credit growth in this cycle is AI capex debt. For that to break, you would need defaults across data center financing, but the debt just got issued and demand is still accelerating. Neither end of cycle scenario is showing up in the data right now, which is why I stay positioned for continuation.

6. Real rates are still the entire macro story. Two year real rates rose during COVID, because the Fed didn’t keep pace with inflation. In 2008 they rose because the Fed was behind. This time the supply side is being retooled by AI at the same time as real rates fall, which is why valuations can keep expanding without breaking.

7. The ECB is being more restrictive than the Fed because Europe is short crude. That is the entire reason DAX and Eurostoxx have not made new all time highs. Once crude falls and the ECB pivots, you get the catch up trade where European stocks rally hard. Watch the Euribor curve for the first sign of that flip. Until then, the rate differential keeps capital flowing into euros while suppressing European equities.

8. The Qualcomm trade hit our channel today and we trimmed half the position. Jaymes called this at $135 a few weeks ago. False breakdown on the long term chart, every other semi competitor was ripping, and the company was forgotten by FinTwit. The leaps are now up around 700%. The framework worked because we stacked the macro regime, the SMH sector flow, and the idiosyncratic mispricing. Stack edges, hold the trade, and let the framework compound.

See the recent video by Jaymes here:

Slide Deck and Playbooks

Here is the slide deck from today’s stream:

Capital Flows Livestream 2026 05 11

11MB ∙ PDF file

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FX Drivers, AI Flows, and Sector Flows on a Cross-Border Basis

Tomorrow I map FX drivers, AI flows, and sector flows for every major country on a cross border basis. Every country sits in a different position on the impossible trinity, which means each one has different FX drivers, different AI exposure, and different sector flows that absorb the macro pressure. This is how you turn the impossible trinity framework into specific positioning across global equities, FX, and rates.

TOMORROW’S LIVESTREAM: LINK

I laid out my public view on the addition of the first Hyperliquid ETF and its impact on PURR here: LINK. Important points below.

Proprietary Macro Research For Paid Subscribers:

The Full Economic Picture: Connecting Growth and Inflation to Long Term Interest Rates

Capital Flows — Thu, 07 May 2026 01:44:20 GMT

Today, I broke down every major growth and inflation data point and connected it to long term interest rates and asset prices. Real GDP is running at 2 percent, nominal at 6, and the Atlanta Fed Nowcast is at 3.7 with fixed investment adding 100bps. Personal interest payments are at highs but delinquencies are not rising, which tells you the consumer is more resilient than the bears want to admit. The full slide deck and the STIR replication playbook with all the code are available for paid subscribers.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. Real GDP at 2 percent and nominal at 6 percent is a strong macro regime, period. Even if you assume the data is lagged, getting from 2 percent to recession requires a sustained deceleration that takes time. The Atlanta Fed Nowcast is at 3.7 percent. Fixed investment alone is adding almost 100bps. None of that is consistent with the recession narrative that has been getting cooked for two years.

2. Consumption is 68 percent of GDP and the personal income and outlays data set is the monthly proxy for it. When the data prints monthly and matches GDP almost exactly, you can nowcast quarterly GDP in real time. Every major hedge fund uses credit card data on top of that to refine the estimate. The idea that there is a “hidden recession” not showing up in the data is a tell that someone has not built their own models.

3. We are in reflation, not stagflation. Growth and inflation are both positive, which is the regime where equities rally. Stagflation requires growth decelerating into rising inflation. We do not have that. Real spending is positive, discretionary spending is resilient, and inflation is contained outside of energy. Equities do not rally during stagflation. Equities are rallying.

4. Personal interest payments as a percentage of outlays are at highs, but delinquencies are not rising. That is the cleanest consumer resilience signal in the data. If consumers were getting crushed by debt service, discretionary spending would fall first before delinquencies spiked. We are seeing neither. The mortgage market is more resilient than people want to admit because the 30 year fixed structure locked in low payments for the majority of homeowners.

5. Government spending at 17 percent of GDP plus a 5 percent fiscal deficit plus a negative trade balance is exactly why long end rates are stuck in range. Long end rates price the term premium, which is driven by issuance composition and inflation expectations. As long as the deficit stays elevated and the trade balance stays negative, long end rates have a structural floor. They are not breaking down to 2 percent without a fundamental shift in the fiscal picture.

6. The Fed letting short term real rates run lower than they should is what is creating the dollar weakness. Short term real rates lower than the structural level forces capital out of the dollar and into risk assets. This is why the dollar is bearish, EUR is bid, MXN is making new highs, and the carry trade is at extremes across G10. EWW remains the cleanest equity expression of the Mexico flow.

7. Headline CPI matters more in Europe and Japan because they are net importers of crude. Core matters more in the US because we are a net energy exporter. This is why the dollar rallied during the recent geopolitical shock. Higher crude transmits faster into European inflation than US inflation, which moves rate differentials in favor of the dollar. As crude fades, that flow reverses and the dollar resumes the structural decline.

8. The Fed allowing inflation to seep into the system without hiking is the liquidity impulse that keeps capital moving out the risk curve. Inflation rising plus the Fed pausing equals real rates falling, which mechanically forces capital into equities. SMH melting up today is the AI capex transmission. The Russell holding range is the small cap capex transfer recipient. The credit cycle melt up extends as long as this regime stays in place.

Slide Deck and Playbooks

Capital Flows Livestream 2026 05 06

13.4MB ∙ PDF file

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All of the models:

Models: (These TradingView models are the ones that I use every day. If you are trying to understand how to use them, just plug them into AI and ask for an explanation.)

https://www.tradingview.com/chart/2f5nDvsW/
https://www.tradingview.com/chart/HbKBeNCc/
https://www.tradingview.com/chart/aJ6Sy5b8/
https://www.tradingview.com/chart/pa0No7P2/
https://www.tradingview.com/chart/2taQ63im/
https://www.tradingview.com/chart/kZ8JijHH/ (Models from my friend Alfie https://substack.com/@alfiekerswell)
If you don’t have a Bloomberg, the CME Tools are your best friend:
- CVOL CME Tool: LINK
- QuickStrike: LINK
- Liquidation Nation: LINK

Cfr Stir Replication Playbook (2)

993KB ∙ PDF file

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Livestream Tomorrow:

I’m traveling tomorrow morning and won’t be able to do the livestream at the regular time, but I will be doing a livestream later in the day. I am just unsure about the time right now. I will send out an email when I know and when the livestream starts.

Thanks

Cross Asset Positioning and Equity Long Short Positioning Inside the AI Compression Trade

Capital Flows — Wed, 06 May 2026 00:53:42 GMT

Today I went deep on cross asset vol, equity long short positioning, carry trades, and CTA flows. Vol has collapsed across equities, rates, and FX simultaneously, which mechanically forces vol targeting and risk parity funds to lever up into the same names.

The proprietary macro research for paid subscribers is just below the summary and slide deck from today’s livestream. I also provided the code for the internal STIR model I run.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. Until you break a multi day consolidation range to the downside, this trend does not turn. Pulling back into a prior consolidation range and finding bids off trapped sellers is the same playbook we have seen for two months. There are no inventory longs trapped overhead. The range below is full of trapped sellers who become future buyers as they cover. That dynamic flips supply and demand in a single session, which is why every micro dip rips back to highs within 24 hours. -

2. A liquidation break is the most bullish setup in a maturing trend, not the bearish one. When sellers force a 1.5 to 2 percent whoosh through prior consolidation ranges, longs puke and shorts cover. That clears the supply overhead and creates a vacuum. The next leg up has no resistance because the weak hands are gone. If you have been locked out of this rally, that liquidation break is the buyable opportunity.-

3. Cross asset vol has collapsed across the VIX, MOVE, and CVIX simultaneously, and the correlation between them is rising. When equity vol, rate vol, and FX vol all collapse together, that is a macro factor signal, not an idiosyncratic one. It tells you capital is moving out the risk curve across every asset class at the same time. That is the regime that mechanically forces vol targeting funds and risk parity funds to lever up.

4. The inelastic market hypothesis is the amplifier nobody is mapping. One dollar of passive index flow lifts the market by five dollars because passive investors buy and never sell. The S&P top seven stocks now control a massive part of the index. Every dollar of passive flow gets concentrated into those seven names, which is why the equal weighted RSP is still below all time highs while SPY is at highs. When we eventually get a real selloff, that same mechanic works in reverse and makes the move violent. has a lot of great work on this. If you are trying to conceptualize this idea, reference 1 hour and 2 mins in the livestream.

5. The IGV up SMH down divergence is the equity long short positioning unwind in real time. Hedge funds are positioned long SMH and short IGV. The unwind is not going to be a violent SMH crash. It will be an orderly bid in IGV that drags the index higher while SMH consolidates. Microsoft holding flat as the institutional anchor for OpenAI and Azure tells you the unwind has more room to run.

6. The carry trade complex is extreme across every asset class right now. Yen funded dollar long positions, peso longs, EUR/JPY, the entire G10 carry index sits at extremes. As long as cross asset vol stays compressed, the carry trade keeps paying. The risk is not that the carry trade fades. The risk is that vol blows out somewhere and forces a coordinated unwind across every leveraged position simultaneously.

7. CTA positioning is at all time highs, which works on the upside and works on the downside. The CTA index just hit a new high. Trend followers are max long S&P, max long gold, and at extremes on every major asset. That is the marginal flow pushing the melt up further. It also creates the asymmetric risk: when CTAs unwind, they unwind everything at the same time across every market.

8. Capital is moving out the risk curve. High quality versus low quality factor down 14 percent, stagflation factor down 14 percent, OpenAI ecosystem leading attribution. Liquidation Nation’s factor breakdown shows the market is paying capital to take risk and punishing capital that hides in defensive trades. The OpenAI ecosystem is the single largest factor driving returns over the past month. That is the signature of a credit cycle melt-up funneling into a specific set of beneficiaries.

Slide Deck and Playbooks:

Here is the slide deck from today’s livestream:

Capital Flows Livestream 2026 05 05

12.5MB ∙ PDF file

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Tomorrow's Livestream: Full Economic Picture: Connecting Growth and Inflation to Long-Term Interest Rates

Tomorrow, I lay out the full economic picture and connect every major growth and inflation data point to long-term interest rates. Long-end rates price long-term nominal GDP, which means they reflect the market’s view on growth plus inflation over the cycle. I walk through the labor market, capex, productivity, ISMs, services data, headline and core inflation, trimmed mean, and inflation expectations to map exactly where the long end should sit and where it actually is. The gap between those two is the trade. Plus what NFP on Friday means for the framework heading into next week.

TOMORROW’S LIVESTREAM: LINK

Paid Subscriber Section: Proprietary Macro Research

I told everyone today that I would be sharing part of the proprietary dashboard I run to monitor and map interest rates (link). You can find the code and instructions to run it below.

Once you pull the data, you can feed this PDF into your AI or manually go through and copy/paste the code yourself:

Cfr Stir Replication Playbook

993KB ∙ PDF file

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The Yield Curve, Inflation Risk, and Why the Curve Determines Risk Assets Through Earnings

Capital Flows — Fri, 01 May 2026 03:19:51 GMT

Today, I walked through the full yield curve framework with Jaymes Rosenthal and how each regime maps to the Fed’s policy error against growth and inflation. The PCE print came in with headline up 70bps MoM while core stayed contained, and that single distinction is the entire question right now. Z7 held the level we mapped yesterday, ES bottomed at that exact level intraday, and the cross-asset linkages are doing exactly what the framework predicted heading into the heaviest two weeks of mega-cap earnings of the year.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. Every macro story collapses into the curve. Growth, inflation, policy stance, dollar direction, credit appetite, equity rotation. All of it shows up in where the front end and back end sit. The yield curve in itself is not a directional rate signal. The four regimes are bull steepening, bear steepening, bull flattening, and bear flattening, and each represents a specific combination of where the Fed is making a policy error against where growth and inflation are heading. Read the regime, and the macro stops being disconnected data points and becomes a single coherent signal.

2. 5s30s sitting above 2s10s right now is the cleanest growth resilience signal in the market. When the longer duration curve is steeper than the shorter duration curve, you are seeing more sensitivity to long-term nominal growth than to Fed policy. If growth were actually breaking, 5s30s would compress against 2s10s as the long end signaled real economy weakness. We are not seeing that. The curve shape is consistent with the credit cycle melt-up extending, not breaking.

3. PCE headline ticked up 70bps month over month. Core stayed contained. That distinction is the single most important macro question heading into the next month. If crude pass-through stays at the headline level and does not transmit into core, long-end rates have a ceiling and equity multiples hold. If core reaccelerates, the long end has to price more inflation premium, which forces the bear steepener and crushes equity multiples through the discount rate channel. The market is pricing the contained outcome right now.

4. Long-end rates kill equity multiples through the risk curve, not through the Fed. If you can buy the 30-year Treasury at 5 percent yield, that is much less risky than buying the S&P at a 2 percent yield. As long-end rates rise, capital reallocates away from risk assets toward the risk-free rate. The Fed only controls the short end. Growth and inflation control the long end. The long end is what determines whether equity multiples expand or compress, not the Fed funds rate.

5. Z7 held the level we mapped yesterday and ES bottomed intraday at the same level. Yesterday I called out 96.340 on Z7 as the level capping the downside in bonds, gold, silver, and EURUSD. Today ES made its intraday low at the exact same level mechanically because the equity discount rate is anchored to the same Fed reaction function pricing through Z7. EURUSD, gold, silver, and ES are all in the same correlation cluster because they all price off short-end rates. Trading one asset means understanding all of them.

6. Z7 has limited downside but limited upside from here. That makes it a fade trade, not a directional trade. Going much lower requires the Fed to actually hike, which the data does not support. Going much higher requires aggressive cuts, which Warsh’s framework does not justify in the immediate term. The trade is not Z7 itself. The trade is the second and third order effects in EURUSD, gold, silver, and equity multiples that move when the cluster reprices around Z7.

7. The Qualcomm catch-up trade is up 44 percent from the $135 entry on leaps. That is the framework working in real time. James called Qualcomm at $135 a few weeks back. Capitulation wick below the range, every other semiconductor competitor bidding, and the company forgotten by FinTwit. Downside limited, upside asymmetric. Now we are up 44% on the equity. This is what happens when you align a cross-asset macro framework with single-name idiosyncratic setups. The melt-up creates these catch-up trades constantly.

Slide Deck and Playbooks

In the slide deck from the livestream, you can find the full breakdown of all the ideas and moving parts I covered.

Capital Flows Livestream 2026 04 30

6.1MB ∙ PDF file

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Us Interest Rates Trading Tactical Playbook (5) (5)

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Yield Curve Model From Tradingview: LINK

Tomorrow’s Livestream: Capital Flows | End of Week Wrap: How Interest Rates Cause the Rise and Fall of Nations

Tomorrow is the end of week wrap. We pull together everything that happened this week from FOMC through PCE, but we widen the lens significantly. Interest rates are the price of time and the price of money, and across history, they are the single most important variable that determines which nations rise and which nations fall. In a globalized world with excessive government spending across every major economy, tracking capital flows is the entire game. We map why the dollar, the curve, and cross-border flows are doing what they are doing, what that means for the next leg of the credit cycle, and why this framework is the only way to navigate a world where every government is running deficits and every central bank is repricing its framework at the same time.

TOMORROW’S LIVESTREAM: LINK

Reading the FOMC: How the Curve Reprices Powell's Last Stand

Capital Flows — Thu, 30 Apr 2026 03:27:24 GMT

Today I went through the full FOMC setup with Jaymes Rosenthal, mapping the SOFR forward curve mechanics, the specific levels in the Z7 contract that determine where bonds, gold, silver, and EURUSD bottom, and how the move index has been decoding the crude-to-inflation transmission through positioning.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. The Z7 SOFR contract at 96.340 is the single most important level to watch through FOMC and the PCE print. Z7 is pricing twenty five basis points of cuts between now and the end of twenty twenty seven. We are approaching the level that would represent a complete pause through that horizon. If we move there and hold, that caps the downside in bonds, in gold, in silver, and pushes EURUSD higher. The Z7 contract has already made a new low while ZT has not, which means the front end is leading the curve repricing. That divergence is the cleanest signal we have for where the Fed reaction function is heading post-Warsh.

2. Interest rates are the asymmetrical linchpin on which the entire economy turns. Everything is a pair trade. When you buy the S&P, you are also fundamentally getting short dollars. Every asset is denominated in a currency, and every currency is priced off short-end interest rates. Recessions are fundamentally about a revaluing of the currency. Once you internalize this, the FOMC meeting stops being about the rate decision and starts being about how the meeting reprices the relative value of every asset against the dollar. That is the framework for trading these meetings, not the binary of cut versus hold.

3. The market is pricing 100 percent probability of a hold today. That means everything that matters is in the second and third order effects of the comments, not the decision itself. When the forward curve prices a meeting at one hundred percent probability of a particular outcome, the decision is already in the price. The Fed does not surprise the market when it is fully priced. The market reacts to whatever Powell signals about future actions, the dot plot revisions, and how he frames the legacy of his tenure as Warsh comes in. Reading FOMC means reading what is not priced, and the curve repricing post-meeting is the actual signal.

4. The move index has been decoding the crude-to-inflation transmission through positioning. It moved up when crude initially rallied, but it is no longer responding to crude moving higher. That is a positioning unwind signal. Bond traders hedge inflation risk through crude calls. When the initial crude shock hit, the move index spiked because positioning was caught offside and traders had to buy convexity. Now crude is rallying but the move index is not following. That tells you the crude move is fully expected and traders are no longer caught offside. The asymmetric risk in interest rates has compressed even as crude continues to bid. This is the exact setup that allows real rates to keep falling without breaking the bond complex.

5. Z7, gold, silver, and EURUSD are moving in the same correlation cluster because they all reflect the Fed reaction function. EURUSD is the cleanest expression right now. Everything in this cluster prices off the same input: how aggressive the Fed will be with cuts. If Z7 holds the 96.340 level, the entire cluster bottoms together. EURUSD has been outperforming the cluster on the way up, which makes it the cleanest long expression. Gold and silver are the second cleanest, with limited downside if Z7 holds. Bonds are neutral because the Fed is unlikely to cut into rising inflation expectations in the near term, but the curve does not break either.

6. Long-end interest rates price long-term nominal GDP. Short-end rates price the Fed’s actions. The spread between them is where the policy error transmits. Right now, the ten year is above the two year, which uninverted last year. That means the market is pricing positive growth and a Fed that is not breaking the economy. If the Fed holds rates here while inflation expectations rise, the long end has to price more inflation premium, which steepens the curve further. That is bear steepening, and it is consistent with the inaction-into-supply-shock framework Warsh has been describing. The curve shape is the cleanest read on whether the Fed is making a policy error in real time.

7. Powell needs to push back on the Warsh legacy framing today, but the path of least resistance is to take the high road and exit cleanly. Warsh used his testimony to frame Powell’s tenure as a fundamental policy error. The 2020 inflation framework change is the specific point of attack. Powell can either defend the framework, which would force a more hawkish stance to validate the legacy, or take the high road and let Warsh inherit a clean baseline. The smart money is on the clean exit because Powell has played this game tactfully throughout his tenure with near zero dissent on the FOMC. The framework change comes from Warsh, not from Powell going out with a bang.

8. Powell is also a lens for the committee Warsh inherits. The questions about his legacy are functionally questions about how easy or hard the regime change will be. When reporters ask Powell about his legacy today, what they are really asking is whether the committee will go along with Warsh’s reform agenda or resist it. Powell’s framing on those questions tells you how unified the FOMC is around the existing framework versus how open it is to change. That tells you the speed at which Warsh can implement the regime change once he takes over. The committee dynamic is the actual variable to track post-meeting.

Tomorrow’s Livestream: Capital Flows | Agentic Macro Trading | The Yield Curve, Inflation Risk, and Why the Curve Determines Risk Assets Through Earnings

Tomorrow, I will map how the yield curve connects to inflation risk and why watching the curve shape is the cleanest tradeable signal as we move through the earnings of the largest companies in the index. The curve is the mechanism through which the Fed’s policy error transmits into risk assets. Bear steepening, bull steepening, flattening, and inverting all signal fundamentally different things about inflation, growth, and where capital wants to flow next. With Powell exiting and Warsh setting up the regime change, the curve is going to do most of the work in repricing risk assets through the next two weeks of mega-cap earnings. I break down the specific curve relationships, the inflation transmission, and what that means for IGV, the Russell, and the broader index heading into the heaviest earnings window of the year.

TOMORROW’S LIVESTREAM: LINK

Paid Subscribers: Post FOMC Hedging Pressure Signal

FOMC Setup: How Powell's Last Meeting Reshapes the Real Rate Path

Capital Flows — Wed, 29 Apr 2026 01:57:13 GMT

Today I went through the full FOMC setup heading into Powell’s last meeting that matters before the Warsh handoff. Jaymes Rosenthal and I walked through the policy error transmission framework, the 2018 case study where the curve flattened and equities sold off twenty percent on hawkish error, and how the Powell-to-Warsh framework handoff is going to fundamentally diverge interest rate policy from balance sheet policy. The market is pricing a hundred percent probability of a hold tomorrow. Inflation swaps are rising. Real rates are falling. The Fed’s inaction into rising inflation expectations is the mechanical liquidity impulse that has fueled the melt-up, and that setup is intact heading into the meeting.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. Powell vs Warsh have fundamentally different views on what inflation actually is. That gap is the framework handoff. Powell believes inflation is something that happens to the Fed and the Fed responds to it. Warsh believes inflation is the Fed’s choice. That single difference defines the entire regime transition. Under Powell, every framework is reactive: cut into weakness, hike into inflation, expand the balance sheet in concert with cuts, contract in concert with hikes. Under Warsh, the framework becomes proactive and tools get split: cut rates while contracting the balance sheet, target trimmed mean rather than headline, anchor expectations through changed communication rather than dot plots. The Powell-to-Warsh handoff is not personnel. It is framework.

2. The forward curve is pricing 100 percent probability of a hold tomorrow and a pause across the year. Z6 SOFR is in the middle of its range. The market is no longer pricing cuts or hikes for the rest of this year. Z6 is sitting at the midpoint of its oscillation band. That tells you the market has fully digested the Fed’s wait-and-see posture and is now waiting for the Warsh transition to provide direction. Tomorrow’s meeting matters less for what it does and more for what it does not say. Anything Powell signals about the framework becomes the baseline Warsh either inherits or breaks.

3. Inflation swaps are rising and the Fed is pausing into that. The mechanical result is real rates falling, and that is the liquidity engine. Over the last week, one-year and two-year inflation swaps have moved up. The Fed has not moved. Real rates falling is what mechanically pushes capital out the risk curve. This is exactly the framework Warsh has been describing. The Fed does not need to cut to be stimulative. The Fed just needs to not respond to rising inflation expectations, and the gap between nominals and inflation expectations widens, and real rates compress. We are in that regime right now and the data confirms it.

4. The long end always prices the Fed’s policy error. That is the lens for reading the curve into FOMC. When the Fed makes a dovish error like 2021, the curve bear steepens because long end rates rise to price the error. When the Fed makes a hawkish error like 2018, the curve flattens and equities sell off as growth gets crushed. When the Fed pauses into a shifting regime, you get steepener twists. Right now the curve is showing modest steepening with the long end pricing in some inflation pass-through risk, but nothing that signals a major error yet. The currency and the thirty year yield are the cleanest expressions of the Fed’s net policy error, and both are still in the structural bid for risk regime.

5. The 2018 case study is the cleanest map of what a hawkish error does to equities. Inflation swaps falling plus the Fed hiking equals a 25 percent drawdown. In Q4 2018, two-year inflation swaps were falling. The Fed hiked into that. Real rates rose because nominals rose into falling inflation expectations. Equities sold off twenty five percent. That is the playbook for the bear case. The current setup is the opposite: inflation swaps are rising, the Fed is not hiking, real rates are falling, and equities are bid. Until inflation swaps roll over and the Fed gets aggressive into that, the 2018 analogue does not apply.

6. Warsh is going to diverge interest rate policy from balance sheet policy. That is a regime change most positioning has never seen. The historical pattern: cuts plus balance sheet expansion together, hikes plus contraction together. Warsh wants to break that. Cut rates to transmit to the real economy through the interest rate channel while contracting the balance sheet to offset asset price inflation. That has never been the Fed’s framework. Mapping liquidity in this new regime requires tracking quantity of money separately from the price of money, because they will move in opposite directions for the first time in the modern Fed era.

7. Bill issuance versus bond issuance is one of the most underpriced liquidity inputs in the market right now. When the Treasury issues bills, that is functionally injecting short-term money into the system. When the Treasury issues bonds, it pulls liquidity out in exchange for duration. The 2020-2021 bill-heavy issuance was a massive net liquidity impulse that nobody talks about. The 2023 Yellen pivot toward more bills and fewer bonds caused the equity bottom that fall. Warsh and Bessent will coordinate the duration mix going forward, and shifting the balance can move equity markets significantly without any rate change at all. This is the lever Trump’s team can pull without needing the Fed to act.

8. IGV vs SMH positioning divergence is still intact. Tech down 240bps on the day, IGV down 67bps. The hardware-vs-software split inside the tech complex tells you exactly where equity long-short positioning sits. With IGV holding levels while SMH gets sold harder, the long-short funds are positioned long IGV, short SMH. If FOMC produces any kind of vol event that forces unwinds, the rotation pushes IGV higher and SMH lower in a way that is mechanical, not fundamental. The setup remains the same as I have been mapping for the past two weeks. The catalyst is FOMC tomorrow plus the PCE print on Friday.

Slide Deck and Playbooks

Capital Flows Livestream 2026 04 28

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All educational primers on credit risk, duration risk, the yield curve regime model, and the equity risk curve are free on the Substack.

Tomorrow's Livestream: Reading the FOMC: How the Curve Reprices Powell's Last Stand

Tomorrow, I will be breaking down all of the levels, tensions, and interest rate signals to understand moving into the actual FOMC meeting.

TOMORROW’S LIVESTREAM: LINK

Paid Subscribers Report On Interest Rate Positioning and Volatility:

In the livestream today, I talk about how important it is to understand interest rates. Fundamentally, interest rates are the asymmetrical linchpin on which the entire economy turns.

Interest rates cause the rise and fall of nations because they are the direct input into the currency. All goods, services, and assets are denominated in the currency. Interest rates impact EVERYTHING. This is the book I recommend to everyone on understanding the significance of rates.

How does all of this connect to WHERE we are right now, though?

Decoding the Warsh Testimony: What the Next Fed Chair Actually Said

Capital Flows — Thu, 23 Apr 2026 05:07:46 GMT

Today, I went line by line through Kevin Warsh’s Senate Banking Committee testimony with Jaymes Rosenthal and mapped every major statement to the macro charts that make the transmission mechanism tangible. This is not a routine Fed chair confirmation. Warsh is explicitly calling for regime change at the institution: a new inflation framework, new data sets, the end of forward guidance, a smaller balance sheet, and a coordinated stance with Treasury. He is painting Powell’s tenure as a legacy of policy errors while he does it. If you are positioned for business-as-usual at the Fed over the next two years, you are positioned wrong.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. Inflation is the Fed’s choice. That single framing is the most important thing Warsh said. Warsh called the 2020 FAIT framework change the direct cause of the inflation surge. In August 2020, inflation was running at 1.72 percent. The Fed rewrote its framework to ask for “a little more inflation.” They got a lot more. Cumulative prices are now up 25 to 30 percent across virtually all income deciles. Warsh is not just documenting this. He is explicitly framing it as a “legacy of policy errors” from 2021 and 2022, which is a direct indictment of Powell. This framing matters because it signals Warsh is not here to fit into the institution. He is here to change it.

2. This is a regime change comparable to Volcker, Greenspan, and Bernanke, not an incremental handoff. Warsh said this is “as consequential a moment for the US economy and for the institution as any point since the late 1970s.” He is calling for a new framework, new tools, and new communication. Framework regime changes historically happen through two channels: regulatory changes that shift how capital flows through the economy, and fundamental shifts in how data is interpreted. Warsh is signaling both. The implication for rates, the dollar, and equity valuations is that the interpretive framework under which the Fed reacts to data is about to change, and the forward curve has to reprice around that.

3. The interest rate tool transmits to 340 million Americans. The balance sheet tool only helps people who already own assets. This is the single most important monetary policy distinction Warsh drew. Interest rates transmit into mortgages, auto loans, small business loans, rental markets, gig work, bonuses, hours worked, layoffs, and hiring decisions across the entire real economy. The balance sheet primarily transmits through asset prices, which means it disproportionately benefits the top 50 percent of households that own financial assets, and especially the top 1 percent. Half of Americans do not own any financial assets. Warsh is explicitly reframing the Fed’s toolkit around fairness of transmission, not just efficacy.

4. Balance sheet reduction coordinated with Treasury is coming, and it reshapes cross-asset liquidity. Warsh called the large balance sheet “fiscal policy in disguise” because the Fed now owns more outstanding debt than many parts of the financial markets. He explicitly wants to work with the Treasury Secretary to coordinate a reduction. This is the Powell-Bessent disconnect getting resolved. The key implication is that you can have rate cuts and balance sheet reduction happening in parallel, where cuts stimulate the real economy while balance sheet reduction offsets asset price inflation. That is a fundamentally new liquidity regime that most positioning is not prepared for.

5. Forward guidance is dead. Messier meetings with real dissent are coming. Warsh said the Fed compounded its 2021-2022 error because forward guidance locked them into forecasts they held longer than they should have. His preference is clean memos and messier meetings with genuine dissent. The FOMC dissent chart from 2008 through the Powell era is the cleanest visualization of the problem: Powell’s FOMC has had near zero dissent for the entire tenure. Warsh is going to change that, which means the forward curve needs to price more uncertainty into Fed meetings, which means more premium in the rates and FX markets around every meeting date.

6. New inflation data sets are coming. Trimmed mean and real-time data are going to replace Core PCE as the Fed’s lens. Warsh called current inflation data “imperfect” and explicitly proposed a billion-prices survey that captures underlying generalized inflation rather than headline noise from oil, beef, or eggs. Trimmed mean CPI is at 2.7 percent right now versus headline at 3.3 percent and core at 2.6. That gap matters because under the new framework, Warsh could justify cutting rates even with oil spiking. The supply-side shocks get trimmed out. The demand-side signal is what drives policy. This is the mechanism by which the credit cycle melt-up extends.

7. Warsh is the most AI-informed Fed chair ever, and the supply-side productivity wave reshapes the policy calculus. Warsh said “America’s economic growth potential is rising as we sit here today” and that “the supply side of the economy is drastically changing.” AI capex is now over 660 billion dollars between the major companies. If productivity rebounds the way Warsh thinks it will, disinflation or outright deflation becomes a real risk, which would force preemptive cuts. The policy framework shifts from lagging inflation to anticipating the supply-side shock. That is the setup for negative real rates in the next 12 months.

8. The dollar as linchpin. Warsh, Bessent, and Miran are coordinating a managed dollar decline to rebalance global trade. Warsh described the dollar as “the linchpin of the global economy” but also signaled that the Federal Reserve is “independent inside of government, not independent of government.” The coordinated framework with Bessent and Miran is how Trump unwinds the dollar’s overvalued position to restore US trade competitiveness without sacrificing reserve currency status. This is the FX endgame framework I laid out last week coming into direct focus. DXY going lower, metals bidding, and cross-border flows feeding the credit cycle melt-up.

9. No CBDC, but digital assets are “part of the fabric.” Stablecoins are the winner of this framework. Warsh was explicit that the Fed has no legal authority for a central bank digital currency and that it would be bad policy. At the same time, he acknowledged digital assets are already part of the US financial system. The asymmetry is obvious: stablecoin supply keeps growing, every major stablecoin is dollar-denominated, and the dollar’s reserve currency status gets amplified through stablecoins globally. That is directly bullish for the PURR and Hyperliquid thesis. The Fed is not going to compete with private digital assets. It is going to let them extend the dollar’s reach.

Slide Deck and Playbooks

The largest bets I am taking in ORCL and PURR continue to pay. These are moving in lockstep with the thesis I laid out and the progression of the credit cycle:

The regime change at the Fed will directly play into these dynamics, and you can find the slide deck from today’s livestream here:

Capital Flows Livestream 2026 04 21

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Tomorrow's Livestream: Labor, Growth, and Inflation: How Interest Rates Drive The Credit Cycle

Tomorrow I map the three variables that actually determine where interest rates go from here: the labor market, growth from the AI capex wave, and inflation. All three are moving in ways the Fed’s current framework does not capture, and the Warsh regime change makes the mismatch even larger. I break down how these three feed into each other, how that transmission reshapes global macro liquidity, and what it means for the next leg of the credit cycle melt-up across rates, the dollar, and equity positioning.

TOMORROW’S LIVESTREAM: LINK

Surplus Countries, Deficit Countries, and the FX Endgame

Capital Flows — Thu, 16 Apr 2026 21:56:06 GMT

Surplus Countries, Deficit Countries, and the FX Endgame

Today I walked through the full cross-border flows framework. How the current account and the capital account always net to zero, why that accounting identity is what actually drives FX, and why the people Trump has put around monetary and fiscal policy are the only ones in Washington who understand this structure. On the tape, Opus 4.7 dropped this morning and IGV bid into it. That is the exact positioning signal I have been telling paid subscribers to watch for (link). Tomorrow I dig into the specific positioning unwinds across cross-asset skew and where I think the next leg of the melt-up compounds.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. Opus 4.7 dropped this morning and IGV rallied on the news. That is a regime shift. For the last six months, every Anthropic and OpenAI product release has caused selling pressure in software. Today the biggest model drop of the year hit the tape and IGV is up. When a new model launches and the sector that has been getting sold refuses to make new lows, you are watching positioning reject the bear case in real time. I have been telling paid subscribers this is exactly the tell to wait for. It overlapped with another five percent day in Oracle, which is the direct expression of the same rotation.

2. The current account and the capital account always net to zero. That is not a theory. It is an accounting identity. If the US imports more than it exports, some other country is exporting more than they import. The dollars the US sends abroad must come back, and the only place they come back to is US financial assets. That is why foreign capital bids treasuries, equities, real estate, and private equity AUM regardless of the domestic growth story. If you do not understand that mechanism, you cannot explain why US valuations have been structurally elevated since 2009 while every reductionistic liquidity framework has failed.

3. A trade surplus is not a sign of competitiveness. It is the mirror image of excess domestic savings flowing abroad as capital exports. When a country produces more than it consumes, the excess output leaves as exports and the excess savings leave as capital. These are the same event viewed from two sides of the balance sheet. This is why Michael Pettis has been right for a decade on why the savings glut continues funding US asset markets, and why the dollar’s reserve currency status is simultaneously a privilege and a burden.

4. The dollar’s reserve currency status has a privilege side and a burden side. The privilege is that Treasury can issue cheaply, real yields stay lower than they should, and Wall Street dominates global finance. The burden is that the dollar stays structurally strong, which kills trade competitiveness and slowly erodes the manufacturing base. Wages stagnate because workers compete in a global market, households have to borrow to maintain living standards, and you get persistent inequality in the income distribution that feeds back into more household debt and more asset price inflation. That feedback loop is why home prices and equity valuations are at all-time highs simultaneously.

5. China has run a closed capital account through their real estate unwind, and the divergence in their economic structure is now driving global trade flows. China’s property sector has gone through a 2008-style unwind over the last two years. You can see it in the Bloomberg chart: real estate collapsing while the Goldman Sachs infrastructure build-out index rips to new highs. China’s response has been to export more aggressively to the rest of the world to prop up their domestic system, which is why rare earth, manufacturing capacity, AI infrastructure, and the space race capex have all inflected higher. The closed capital account is why you have not seen capital flight despite the real estate crisis.

6. The Eurozone is structurally short crude, which is why EUR rate pricing stays hawkish relative to the US. Germany exports more than it imports. The Eurozone as a whole does not produce its own oil. When crude rallies, the Eurozone faces a stagflation setup that the US does not face to the same degree, because 70 percent of US GDP is household consumption while the Eurozone is more corporate and export-weighted. That is why the forward curve in the Eurozone is pricing roughly 47 basis points of hikes into year-end while the US is pricing a functional pause. Real rate differentials and monetary policy divergence are now driving EURUSD, not inflation differentials. That shift is the cleanest signal that central banks have moved to the background and cross-border flows have taken over as the primary driver.

7. Cross-border flows are now the dominant liquidity channel, not central bank balance sheets. For the last five years everyone has been focused on Fed balance sheet expansion and contraction. Central banks have largely paused. The marginal mover is now the savings glut recycling through FX and capital flows. That is why you are seeing EURUSD rally with equities while bonds sit in a range. Equities and FX have decoupled from bonds and crude. Once you understand that cross-border flows are the variable, you stop waiting for the Fed to do something and start tracking real rate differentials, FX positioning unwinds, and savings repatriation.

8. Bessent, Warsh, and Miran are in place because they understand this structure and Trump wants it unwound. Druckenmiller’s commendation of Warsh years ago was specifically that he understood global capital flows better than anyone he had ever worked with. Bessent built his career trading these imbalances. Miran wrote the playbook. Tariffs were never the endgame. The endgame is shifting pressure on China, which had been rerouting exports through Vietnam, Mexico, Thailand, and India to get around direct tariffs. If the administration can actually cut a deal that forces China to boost domestic consumption and stop dumping excess savings into US asset markets, it will be the most consequential structural shift in global trade in 40 years. That is the FX endgame everyone is missing.

Slide Deck, Credit Cycle Playbooks, Educational Primers:

Below are the 3 reports/videos I have done on the current credit cycle and the bets I am taking in it. If you are trying to understand WHERE we are and WHAT to look for, go through these.

Here is the slide deck from today’s livestream:

Capital Flows Livestream 2026 04 15

3.67MB ∙ PDF file

Download

Tomorrow: Capital Flows | Positioning Unwinds and the Next Leg of the Melt-Up

Tomorrow I map where the specific positioning unwinds are setting up across cross-asset skew. Where EURUSD skew finished unwinding and what that means for the next leg. How the G10 carry trade index making new highs connects to where global equity sectors bid next.

TOMORROW’S LIVESTREAM: LINK

See the paid subscribers section at the end of this report for the views and drivers I explained: LINK

I will expand more on this in the next positioning report exclusively for paid subscribers.

Cross-Border Flows, the Dollar Devaluation, and the Global Trade Rebalancing

Capital Flows — Thu, 16 Apr 2026 01:12:56 GMT

Cross-Border Flows, the Dollar Devaluation, and the Global Trade Rebalancing

Most of the narratives about macro liquidity, dollar devaluation, and credit cycles circulating right now are disconnected from price. Today I went back to first principles. What is money? How does credit creation actually work? What are the two fundamental risks that price every asset in existence? And how do you connect all of that to what is actually happening in markets right now rather than just describing an abstract concept? Below are the main talking points. Tomorrow I go deeper into cross-border flows, trade imbalances, and how surplus and deficit countries drive FX.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. Every financial asset is simultaneously someone else’s liability. Your bank deposit is the bank’s debt. Your treasury bond is the government’s debt. Your mortgage is an asset to the bank. This is not a philosophical point. It means that money never functions in a vacuum and that every macro shift creates winners and losers on both sides of these relationships simultaneously. If you bought a house in 2020 at a locked-in low rate, you are winning as inflation rose. The bank that issued that mortgage at 3% into a 5% rate environment is losing in real terms. That asset liability mismatch is how financial crises actually happen.

2. Most money in the modern economy is credit, not central bank printing. When a bank makes a loan, it creates an asset and a new liability simultaneously. No physical money is printed. Purchasing power is created through an accounting entry. This is why the Fed expanded its balance sheet through the entire 2010s and inflation barely moved. The people saying quantitative easing always causes inflation could not explain that. If you cannot explain that divergence, your liquidity framework is incomplete.

3. Every asset in existence is priced by exactly two risks: duration risk and credit risk. Duration risk is the uncertainty of real purchasing power over time, driven by inflation. Credit risk is the uncertainty of nominal repayment, driven by growth. Long bonds and growth stocks get crushed when inflation rises because of duration risk. High yield spreads blow out in recessions because of credit risk. Everything else is a derivative of these two. Once you understand that, the stock-bond correlation tells you in real time whether markets are pricing a duration shock or a credit shock on any given day.

4. The 2022 bear market was a duration risk event, not a credit risk event. Stocks and bonds sold off together because the primary driver was inflation repricing the value of future cash flows. Credit spreads widened but not catastrophically. The labor market held. That is not what a credit cycle contraction looks like. Understanding that distinction would have kept you on the right side of the trade all year and prevented you from being positioned for a recession that never arrived.

5. Crises do not erupt from high debt levels. They erupt from asset liability mismatches. Every chart on Twitter showing debt-to-GDP at all-time highs is not telling you a recession is coming. It is describing a stock. What matters is the mismatch -- when short-dated liabilities are funding long-term assets and the rollover conditions change. The duration of high yield debt has been collapsing for five years. Banks are giving shorter terms on high yield credit, which means less duration risk in the high yield market but more refinancing risk. That dynamic is why the high yield ETF moves with equities, not with TLT.

6. The equity risk curve is the most direct read on whether liquidity is expanding or contracting. The Goldman Sachs high yield debt sensitivity index, which captures the stocks with the most leverage, has been making multiple all-time highs. Capital is moving out the risk curve into the highest risk, highest leverage names. That is not what a liquidity contraction looks like. If someone is telling you liquidity is contracting while that index is at all-time highs, their framework has been falsified by price. Connect your view to price or admit the view is wrong.

7. The yield curve encodes the current macro regime in real time. Bull steepening signals crisis or aggressive easing. Bear flattening signals late-stage tightening. Bear steepening signals inflation fears. Bull flattening signals a growth scare. We had the curve invert on inflation risk in 2022, not recession risk. We un-inverted into bear steepening because growth and inflation were accelerating, not because a recession was imminent. Everyone who said the un-inversion signals recession lost money. The model is free on the Substack. There is no excuse for not having it.

8. Tomorrow: how surplus and deficit countries drive FX, carry trades, and cross-border flows. The US is a trade deficit country. China is a surplus country actively suppressing its currency to carve out global manufacturing. Every other major economy is choosing between defending trade competitiveness and fighting inflation. That contest is playing out in FX right now and it connects directly to how capital flows across borders, what the dollar does next, and why the people Trump has put in place -- Bessent, Warsh, Miran -- all specialize in exactly this. That is tomorrow’s stream.

Slide Deck, Credit Cycle Playbooks, Educational Primers:

Below are the 3 reports/videos I have done on the current credit cycle and the bets I am taking in it. If you are trying to understand WHERE we are and WHAT to look for, go through these.

Here is the slide deck from today’s livestream:

Capital Flows Livestream 2026 04 15

2.67MB ∙ PDF file

Download

Here are the two educational primers I wrote on the credit cycle and money:

Beyond The Credit Cycle A Path Dependent Asset Liability Macro Primer (1) (5) (8)

240KB ∙ PDF file

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The Macroeconomic Framework Of Capital Flows A Comprehensive Playbook (2) (5) (11)

633KB ∙ PDF file

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All of the educational primers are here for free:

Tomorrow: Capital Flows | Agentic Macro Trading | Surplus Countries, Deficit Countries, and the FX Endgame

Tomorrow, I am mapping the full cross-border flows framework. How trade imbalances between surplus and deficit countries create the savings glut that funds US asset markets. How China weaponizes its currency. Why the dollar falling against the yuan right now is not a liquidity story -- it is a deliberate trade rebalancing play. And how all of that connects to carry trades, FX positioning, and the next leg in equities.

TOMORROW’S LIVESTREAM: LINK

For Paid Subscribers: Macro Flows and Positioning Analysis

PCE, Real Rates, and the Melt-Up Setup

Capital Flows — Fri, 10 Apr 2026 02:16:49 GMT

PCE, Real Rates, and the Melt-Up Setup

The geopolitical premium is coming out of the system and the market is now re-asking the question it was asking before all of this started: where are real rates going, and what does that mean for everything else? Today I covered the PCE data, the bond positioning shift taking place right now, why the FX market is already pricing the next leg in crude, and why the AI infrastructure rotation is about to become the dominant theme again. Below are the main talking points. Slide deck is embedded below. Paid subscribers get the full breakdown below.

LIVESTREAM RECORDING FROM TODAY:

Today’s Livestream: Main Talking Points

1. Real rates just made new lows across the curve and that is the liquidity signal everyone is missing. One-year and two-year real rates both printed new lows today. That is not a coincidence after an oil shock. The crude impulse ran through the system, inflation expectations rose on the short end, and now as crude retreats the Fed’s pause is creating a net liquidity injection even without a cut. When real rates fall and the Fed does nothing, money enters financial markets. That is the setup right now.

2. Stocks are outperforming bonds on the day and that is the pair trade. Long stocks short bonds remains the right expression in this regime. Inflation needs to make its way through the system still, which makes outright long bonds uncomfortable. But stocks can rally through it. You can already see ES making new highs intraday while ZN has not cleared yesterday’s high. That asymmetry is the signal.

3. Bond positioning just had a capitulation and is now rebuilding. CME open interest data shows a massive washout in ten-year note futures earlier this week, followed by new long positioning being rebuilt on Tuesday. Six and a half million DV01 of new longs across the ten-year contract. This means the market has already cleared the peak fear on rates. The setup is for rates to consolidate here, not spike further.

4. Long-term inflation expectations are falling, not rising. Ten-year and thirty-year inflation swaps have been declining even as short-end swaps moved up with crude. The market is telling you this is a supply shock with a time limit, not a new demand-driven inflationary cycle. That is why the Fed is not hiking and why positioning in the Z6 contract has flipped from pricing a hike back to pricing five basis points of cuts this year.

5. The FX market is pricing the next leg down in crude before it happens. Hedge funds are now using currency options on the South Korean won and Chinese yuan to bet on crude falling further. The dollar against the yuan has been moving in lockstep with crude for months. When that pair breaks to a new low, it leads crude lower. Watch dollar-yuan tonight. If it makes a new low, the crude unwind accelerates.

6. There is still massive vol premium in the crude options market to unwind. Implied vol in crude is still running at eighty percent. Call skew just spiked again at the lows as people re-leveraged into calls. That is a contrarian signal. If de-escalation continues, you could see crude vol crush from eighty back to sixty or forty in a session. Same dynamic that caused the gap up can cause the gap down.

7. Gold and silver are set up to rally as macro liquidity expands, not as geopolitical hedges. Gold’s sensitivity to real rates has dropped since 2024 and its drivers have clearly shifted to the quantity of money in the system. Put skew in gold capitulated at the exact low in March, the same moment FX put skew peaked. That was the bottom. Now as real rates fall and the dollar weakens, gold and silver rally on the liquidity injection, not the geopolitical story. This will confuse a lot of people. That confusion is the opportunity.

8. Industrials and materials outperforming tells you where the market is going next. Energy is down on the week but only contributing 22 basis points of negative return to the index because of its small weighting. What matters is industrials and materials leading, which reflects the second and third order transmission of the crude impulse into the real economy, and the AI infrastructure build-out starting to reassert itself as the dominant theme. EQIX just made an all-time high while the rest of the market was sitting flat. The largest data center REIT in the world making new highs with the highest fundamental attribution in its sector is the market telling you exactly where flows are going next.

SLIDE DECK

All charts and models from today’s stream:

Capital Flows Livestream 2026 04 09

2.01MB ∙ PDF file

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Tradingview model quantifying the relative stock bond returns: https://www.tradingview.com/chart/pDBgSlBd/

Additional TradingView models:

https://www.tradingview.com/chart/2f5nDvsW/
https://www.tradingview.com/chart/HbKBeNCc/
https://www.tradingview.com/chart/aJ6Sy5b8/
https://www.tradingview.com/chart/pa0No7P2/
https://www.tradingview.com/chart/2taQ63im/
https://www.tradingview.com/chart/kZ8JijHH/ (Models from my friend Alfie https://substack.com/@alfiekerswell)
If you don’t have a Bloomberg, the CME Tools are your best friend:
- CVOL CME Tool: LINK
- QuickStrike: LINK
- Liquidation Nation: LINK

All the educational primers:

Tomorrow: Capital Flows | The top stocks in each sector setting the tone for traders

Daily at 8:30 am MST

Tomorrow I am going through the names that are being bid by fundamental investors right now, not broad market beta. When the whole market sells off and certain stocks hold or make new highs, that is informed money telling you something. I will walk through the attribution model, break down which sectors and single names are showing the highest fundamental signal, and explain exactly what that means for how you should be thinking about positioning over the next 30 to 60 days. This is the why behind the market move that nobody is mapping in real time.

LIVESTREAM LINK FOR TOMORROW: LINK

Macro Liquidity:

The Misunderstood Market: Stagflation and Macro Liquidity

Capital Flows — Wed, 08 Apr 2026 01:07:51 GMT

The Misunderstood Market: Stagflation and Macro Liquidity

Something is happening in the macro regime right now that most market participants are either ignoring or misreading. I spent today’s livestream walking through five interconnected themes that I think are getting underpriced. Below are the main talking points with all the charts and models. Scroll past those for what I am covering tomorrow and what is coming for paid subscribers tonight.

LIVESTREAM RECORDING FROM TODAY: LINK

Today’s Livestream: Main Talking Points (3 min read)

1. Crude implied vol is not telling the same story as spot. The spot price of WTI is back near highs, but call skew is not spiking the way it did on the first two moves up. Vol is elevated but the premium structure has changed. That matters because the positioning behavior around crude right now is connected to hedging activity. Large allocators who are long-duration or running inflation-sensitive portfolios are using crude calls to hedge geopolitical risk rather than expressing directional conviction on the barrel. That is a different signal than outright bullish crude positioning.

2. The WTI-Brent spread is now at its widest since 2008. This is not just a number. The spread between these two contracts maps physical market dislocations in real time. A spread this wide reflects a real supply and demand imbalance in how crude is priced across geographies. Traders watching this spread are watching something the spot price does not tell you.

3. CPI this week is a clearing event, and core is the variable that matters. Headline CPI is expected to come in at 3.4% year over year. Core is expected to accelerate from 2.5% to 2.7%. The question that will actually move markets is not whether headline comes in hot. Everyone already knows headline is going to be hot because of energy. The real question is how much of the crude price impulse is transmitting into core. That transmission rate determines how much optionality the Fed has for the rest of the year. If core comes in below expectations, a significant amount of hedging activity unwinds very fast.

4. Long-term inflation expectations are not rising. That is the key difference from 2022. In 2022, when the Fed was forced to hike aggressively, you had long-term inflation swaps moving up alongside short-term. That reflected a demand-driven inflationary impulse. Right now, one-year swaps have moved up with crude but five and ten-year swaps have barely moved. That is the structural reason why the Fed is not hiking this year even though the forward curve briefly priced a 25bps hike last week. The market corrected that quickly. Watch the Z6 contract. If it spikes back up toward that level this week, that is a fade.

5. Treasury vol is spiking but the setup is for a positioning unwind, not a continuation. 10Y futures vol has surged. That is not a breakout signal. It is a reflection of hedging pressure in the rates market ahead of CPI and whatever happens with the Iran situation tonight. The covariance between stocks, rates, and the dollar has been weakening over the last week. That weakening is the signal that the macro impulse is losing momentum. Mean reversion becomes the higher probability setup from here, not continuation of the regime.

6. EURUSD is pricing a lot of bad news that may not materialize. The Euro has sold off hard because Europe is a net energy importer. When crude spikes, Europe faces an inflation shock that the US does not face in the same way because the US is a net exporter. Put skew in EURUSD has blown out to extremes. If tonight does not produce further escalation and CPI does not come in catastrophically hot on core, the unwind in EURUSD positioning could be sharp. The pair is already showing signs of stabilization at these levels.

7. Real interest rates are the actual macro liquidity signal. One-year real rates have been falling. That is the single most important thing happening in the plumbing of the system right now because falling real rates inject liquidity even without a Fed cut. Five and ten-year real rates are still elevated but the short end is loosening. If this continues into a cleaner macro environment post-CPI, it creates the setup for a significant equity bid, particularly in rate-sensitive segments of the market.

8. The pair trade that makes sense here is long stocks, short bonds. The regime where stocks are down, rates are up, and the dollar is up only occurs about 10% of the time historically. We are in it now and the correlation structure is weakening. The long stocks short bonds trade captures the asymmetry in how these unwind. Gold long, bonds short is the other expression. Russell has been outperforming the S&P this week for a reason. The DAX is also worth watching for a long entry on any intraday dump into macro clearing events.

[SLIDE DECK]

Capital Flows Deck

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Tomorrow: Capital Flows | Equity Dispersion and the Rotation - Mag7, Oracle, and OpenAI

Livestream: Daily at 11:30am EST - We are in such a critical time in the macro and AI endgame that I will be doing a livestream every day of the week at 11:30am EST.

The equity selloff is being read as recession risk-off. That is the wrong frame. Tomorrow I am walking through why this is a rotation and microstructure story, where the crowded positioning was coming into this move, and where the opportunity sits for the next 30 to 60 days.

TOMORROW’S LIVESTREAM: LINK

For Paid Subscribers: The Positioning Report

About an hour after I ended the livestream today, news came across the tape that unwound A TON of the geopolitical premium in the market.

This is exactly in line with the flows I have been laying out for paid subscribers, as well as my comments in the livestream today.

Last week, I made a very clear note that positioning was way too aggressive for the geopolitical risk premia in markets. I noted that the Russell was the best way to express this (link):

The Russell is now outperforming ES and NQ on the news. Understanding these flows are one of THE main things I will be covering in the livestream tomorrow:

As crude as fallen, gold and silver have bid in lockstep with the views I have been laying out in the subscriber chat:

Gold and silver are now bidding on geopolitical risk decreasing. Doesn’t make any sense? People said metals are supposed to bid on geopolitical risk? This is a very narrow view of the drivers of gold as well as the positioning premiums around it. This is going to be THE dynamic I explain below.

The Crowded Exit

Capital Flows — Mon, 16 Mar 2026 03:06:46 GMT

FOMC and the Positioning Risk In Inflation

Markets are pricing geopolitical risk as a short-term inflation accelerant, which is pushing rate cut expectations lower and raising the specter of stagflation. Dollar strength reflects this dynamic precisely: short-end inflation expectations (1y and 2y swaps) are rising while real rates climb on the long end (10y and 30y), a combination that has been mechanical support for the currency.

We are approaching a critical inflection. FOMC this week creates a binary setup. If geopolitical risk fades and crude sells off, or if the Fed signals less concern about inflation on the grounds that the current move is supply-driven rather than demand-driven, the market’s hawkish repricing could unwind quickly. Either catalyst would likely produce equity buying and dollar selling. That reversal would carry extra force right now, given how elevated implied volatility is, which tells you hedging premiums are stretched and any shift in sentiment gets amplified as those positions unwind.

I explained the mechanics of the dashboard above, along with an extensive breakdown of the macro regime in the livestream earlier today. You can find the full recording here:

Positioning is one-sided:

The chart crystallizes the positioning argument. Crude call skew (white) has surged to levels not seen in years, reflecting aggressive demand for upside protection in oil as markets price a geopolitical supply shock into the inflation narrative. Crude implied volatility premium(yellow) has followed, confirming that the entire options surface in energy has repriced higher, not just the directional skew. Simultaneously, SPX put skew (green) has reached comparable extremes, as equity investors have rushed to protect against a growth shock. EURUSD put skew (magenta) completes the picture, with the market heavily positioned for continued dollar strength against the euro.

What makes this moment genuinely unusual is that all four measures have spiked in unison, suggesting the positioning is cross-collateralized across asset classes rather than idiosyncratic to any single market. Traders are hedging the same macro thesis simultaneously in crude, equities, and FX, which means the trade is crowded from multiple directions at once. This is the setup heading into FOMC. The pause itself is not in question, with the forward curve pricing it as a certainty, but the December 2026 contract has been repriced down to roughly 17 basis points, essentially less than a single cut. The real question Powell faces is whether to push back on that repricing and restore some easing optionality for 2026, and if he does, the unwind of this correlated hedge stack could be sharp precisely because so many positions are leaning the same way at the same time.

The Z6 SOFR contract (showing the markets expectations for how many cuts this year) is sitting at 17bps as the terminal rate is pricing a total of 35bps of cuts for this cycle.

The problem with this pricing is that, as I laid out in the livestream (link), the growth side of the equation is at more risk since the labor market is near the zero bounds of growth. 3-month change in NFP (bottom panel) is functionally a coin flip, and the most recent MoM NFP print (blue) was negative just as the inflation impulse in markets accelerated (visualized by the orange bars in the background).

The FOMC meeting this week carries a genuine double tension. Inflation is accelerating at the same time growth is under threat, but the inflation impulse is supply-driven rather than a reflection of excess nominal demand, which complicates how aggressively the Fed can respond. Layered on top of that is a deeper uncertainty: markets do not know how to weight Powell’s forward guidance when he is likely months away from being replaced, which leaves positioning one-sided with no clear anchor. The smallest shift from Trump on trade or geopolitics could be enough to trigger an aggressive unwind of the cross-asset hedge stack that has been built up across crude, equities, and FX simultaneously.

Tomorrow’s Livestream

What I have laid out here is the map, but the map is not the territory. The cross-asset positioning picture is clear enough. What is not clear is the sequencing, because the order in which these catalysts arrive changes everything about how the unwind plays out and which instruments express it most cleanly.

There is a specific problem with trading around a crowded hedge stack: everyone sees the same positioning data, which means the consensus trade on the unwind is also getting crowded before the catalyst even arrives. Tomorrow I want to work through how to think about that second-order problem, where the real opportunity is not in predicting Powell but in understanding what the market is already pricing as its escape route and whether that consensus unwind trade is itself mispriced.

We will go deep on the rates structure, what the Z6 contract is actually telling us about the market’s implicit Fed reaction function, and how I am thinking about expressing this across the curve rather than in a single instrument. If you have been following the inflation swap divergence between the short and long end that I walked through above, tomorrow is where that framework gets applied to actual positioning decisions.

Noon EST at this link:

Thanks

Interest Rate Strategy: SOFR and Bonds

Capital Flows — Mon, 09 Feb 2026 12:59:33 GMT

Interest Rate Strategy: Macro

At the beginning of last week BEFORE we had the pullback in US equities, I made a very simple and clear point (link): ES was entering a short period of time where a pullback could occur, and IF it did, 6820 would be an excellent place to get long as we moved into the London session after any type of cash equity sell-off.

This happened almost perfectly as AMZN earnings came out Thursday and sold off after hours (see original report here: LINK):

It doesn’t matter if you caught the low last week or not; what matters is WHY it happened because that will determine HOW you should think about the drivers of markets this week.

MACRO DRIVERS:

There are three major drivers you need to understand to frame the risk-reward in markets this week. None of them exists in isolation. Each one is interacting with the other two, either amplifying or muffling the moves you are seeing across equities, rates, and global flows. If you understand these three drivers and how they connect, you will have a much clearer picture of what the market is actually pricing and where the asymmetry sits.

The AI Rotation Is Still the Primary Driver of U.S. Equity Price Action

The software-to-hardware rotation I laid out last week (Software: The Trade That’s Fooling Everyone) is still developing. The market is not in a risk-off environment. It is repricing who captures the economics of AI, and that repricing is mechanically dragging the S&P 500 because of tech’s outsized index weighting. We are roughly one-third of the way through S&P 500 earnings season, and many of the highest-impact reports are behind us, but the single most important catalyst for this rotation sits at the end of the month: Nvidia reports on February 26th. Until the market gets that print, the tension between hardware strength and software weakness will continue to define the trading range. Every earnings report between now and then is either going to confirm or challenge the dispersion framework. (see video where I explained this below)

AI Investment Is Keeping Long-End Rates Elevated

The AI theme is not just an equity story. It is an investment story, and investment requires capital. The historic CapEx cycle being driven by hyperscalers and AI infrastructure buildout is sustaining real economic activity, and that is showing up in the bond market. Long-end interest rates remain elevated, not because inflation expectations are running hot. Inflation swaps are actually lower than they were six months ago.

Rates are elevated because the economy is still absorbing a massive wave of capital investment, and the market is pricing the duration risk of that investment cycle rather than an inflation resurgence. This distinction matters for how you frame the software selloff. The rate environment is directly linked to investment, which is why long-end rates have moved in lockstep with the recent acceleration in industrial production and durable goods orders.

AI investment is accelerating a rebalancing of the labor market: workers displaced from sectors facing AI disruption are being absorbed into the sectors benefiting from the AI buildout itself.

The Japan Election Sweep Is a Positive Liquidity Impulse for Global Markets

This is the driver most people are ignoring, and it may be the most consequential for near-term price action. Japan’s snap election delivered a historic supermajority for PM Takaichi’s LDP, with the party securing 316 of 465 Lower House seats, the largest single-party result since the LDP’s founding in 1955. This is the outcome I have been laying out as the highest-probability scenario in my recent videos on Japan (link) (link), and the market reaction was immediate.

Cash-settled USD-denominated Nikkei futures on the CME rallied on Friday while Japanese cash markets were closed, front-running the result. The Nikkei opened Monday up 5% to a new record high.

This matters for U.S. equities because the liquidity impulse out of Japan has been seeping into global risk assets for months. Takaichi’s mandate is built on proactive fiscal policy: record government spending, consumption tax cuts, and a multi-year investment framework that abandons the old single-year primary balance constraint. That is a sustained liquidity injection into the world’s fourth-largest economy, and it is running in parallel with a weakening yen that pushes Japanese capital outward into dollar-denominated assets. The Friday rally in U.S. equities did not happen in a vacuum. The combination of the Japan liquidity bid and the tech rebound helped set a near-term floor under U.S. indices at exactly the point where the software rotation had dragged the S&P 500 to the lower end of its mean reversion range.

If you are trying to understand the dynamics of the Yen, see the two videos I published here:

I would also encourage you to read everything by on Japan. He is following and trading the situation there better than anyone else.

Across The Spread

Japan Snap Election: The Takaichi Mandate (Part 1)

This is Part 1 of 2 - pre-result article covering the last 6 months of political turmoil dramatic pathway of Japan blowing up its political system, which is critically necessary to understand market behavior over the last, and next half-year and beyond. Part 2 (after election results): what the “rate check” story is really telling you, and what the mark…

3 months ago · 35 likes · 2 comments · Weston Nakamura

Interest Rate Strategy: SOFR and Bonds

Each of these drivers directly link to and influence one another in a reflexive feedback loop. If you understand the framework I laid out above, then the interest rate analysis below will begin to set up how you should think about correlations, pricing of the SOFR curve, and bonds as we move into this week.

The Risk Of The Yen Is Approaching FOMC

Capital Flows — Mon, 26 Jan 2026 01:06:46 GMT

The Risk Of The Yen Is Approaching FOMC

This week’s note is a two‑part deep dive on the Yen into FOMC.

In Part 1 (below), I walk through the core risks: where we are in the cycle, what’s priced into rates, and the key pressure points for JPY if the Fed’s path shifts from here.

In Part 2, for paid subscribers, I go a level deeper into positioning and implementation: how I’m thinking about expression, where the asymmetry is, and the scenarios that would get me to change my stance.

If you find the first part useful, and want to see exactly how I’m translating it into scenario analysis and strategy implication. Part 2 is just below the paywall for paid subscribers.

Positioning and Strategy Implications:

Part 2:

Interest Rate and FX Strategy: Dollar Risks, Crude Volatility, and Eurozone Liquidity

Capital Flows — Mon, 19 Jan 2026 03:28:00 GMT

Interest Rate and FX Strategy: Dollar Risks, Crude Volatility, and Liquidity

Over the last two weeks, I recorded three short videos walking through how I see the macro regime evolving and what that means for rates, FX, and equities. Those videos went out in real time, but they’re the right starting point for understanding the week ahead, so I’ve pulled them together for you here in front of the paywall.

Think of them as the “pre‑game”: how policy, liquidity, and the cycle have been shifting, why that matters for risk assets, and the key levels and dynamics I’m watching.

Below the paywall is the full written Week Ahead report:

how I’m updating the macro map based on the latest data,
where I see the balance of risk across rates, credit, and equities now,
and the specific positioning implications for the coming week.

If you just want the big picture, the three videos will get you there. If you want the full playbook I’m using to make allocation decisions this week, it’s in the report that follows.

Macro Flows For Week Ahead:

The imminent devaluation of the Yen and its impact on your portfolio

Capital Flows — Tue, 13 Jan 2026 18:05:44 GMT

The imminent devaluation of the Yen and its impact on your portfolio

Most investors still think of “yen risk” as an FX sideshow. It isn’t. When a core funding currency of the system moves, it reshapes the entire global risk curve: who can lever, what counts as safe collateral, and how quickly liquidity vanishes when everyone scrambles for the exit. In this video, I walk through why the yen is set up for a potential devaluation and how that kind of shift transmits into your portfolio even if you never trade a single FX pair.

If you want to go deeper into the bigger‑picture macro forces behind this, I’ve added the full recording of yesterday’s livestream plus the slide deck. That session walks through the broader regime, credit cycle dynamics, and global liquidity backdrop that sit behind the yen story and link it to the rest of your portfolio.

Acfrog~3

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If you’re an active risk taker and want the full mechanics rather than the 30,000‑foot story, read the previous macro report I wrote on this setup. It walks through the plumbing: how funding, balance sheets, and the credit cycle interact with a potential yen devaluation, and what that implies for sizing, hedging, and where you sit on the global risk curve. If you’re putting real capital at risk, that’s the piece you should study.

Interest Rate & FX Strategy: Macro Opportunity

Capital Flows — Mon, 05 Jan 2026 18:23:44 GMT

Interest Rate & FX Strategy: Macro Opportunity

If you are actively trading FX, rates, or equities, I would strongly encourage you to review the video and the connected report on the dollar: LINK

I explained the drivers and risk-reward of the dollar in the previous report, and now I want to cover what I believe to be one of the biggest opportunities in the global interest rate complex.

Main Strategy/Risk Reward Ideas:

Interest Rate & FX Strategy: The Hidden Structure Behind Dollar Weakness

Capital Flows — Fri, 02 Jan 2026 21:23:58 GMT

Interest Rate & FX Strategy: Dollar Devaluation Drivers

The dollar’s weakness has not been driven by headlines or sentiment, but by a clear set of macro forces operating beneath the surface. Compressed rate differentials, crowded carry trades, and falling FX volatility have shaped price action far more than narratives.

Understanding these drivers matters more than reacting to price. FX moves as capital responds to incentives and risk being repriced across time.

Below is a short video walking through the key charts that define the current dollar regime.

The tangible implementation of this video can be found in the report below for paid subscribers.

Macro Drivers and Directional Risk Reward: (For paid community members)