Thread by @Globalflows

Traders in the US bond market are drastically underestimating what is about to take place in macro volatility

This next move in interest rates will set the stage for macro flows over the next 2 years and no one in the media is even talking about it

Let's dig in 🧵👇

Interest rates are THE most important part of macro because they are about the price of money. All goods, services and assets are denominated in money. This means that interest rates are the asymmetrical linchpin on which the economy and financial markets turn.

As a result, small changes in interest rates can have a big effect. large changes in interest rates can change the trajectory of countries. If this is a new concept, you can check out the book thread below on macro books

x.com/Globalflows/st…

Over the last year, 30 year interest rates have NOT moved down as the Fed has cut rates. The entire media industry has said that since inflation is lower than a few years ago, there aren't any risks.

The long end of the curve is showing you that growth and inflation in the US economy are WAY MORE resilient than people expect

Now you might think, ok growth in the economy, that's good right? Well growth in the US economy right now is something that no one is positioned for because everyone got scared for the tariff risk and they think inflation is a nonissue.

The problem is that bank credit is beginning to increase in a massive way:

I already laid out the thesis for the credit cycle here: the main idea is that the entire banking industry floating a narrative that everything is falling apart but they pumped credit into the system

https://x.com/Globalflows/status/1917275348367982946

When you pump credit into the system with growth accelerating and the long end of the curve at highs, you're asking fro trouble. This is why I wrote an entire playbook on WHERE we are going in this cycle:

https://x.com/Globalflows/status/1922458374228074741

I laid out in the interest rate report that long end rates are very likely to move UP (and TLT move down) as credit gets pumped into the system and inflation risk increases.

https://x.com/Globalflows/status/1925603043040796715

What traders are missing is that 30 year interest rates are moving UP but bond volatility is moving down to reflect greater and greater complacency. People don't think 30 year rates can have a large move up because they are anchored to the idea that recession is still a risk

The fact that you have crude up on the day is an early warning signal of this.

And the Fed is missing the entire point as they remain neutral with the excuse of being "data dependent"

Being "data dependent" right now is becoming reckless.

https://x.com/financialjuice/status/1929553285754626070

In this environment, stocks and Bitcoin are going to continue melting up UNTIL interest rates get to high and begin to break things in the system. When this happens, macro volatility will really blow out.

It won't be about a small change here or there, it will impact the markets and economy

The main reason there are risks right now is because there is complacency. No one is paying attention

The entire point isn't to FUD, freak out or go to cash. The entire point is that there some exceptional opportunities being long equities, short bonds, and long metals. There will be a moment when this shifts and being short equities is the play. We are NOT there yet. When we are, I will publish a report on it on the website.

This is how to think about the environment we are moving into. It is the mindset of a risk-taker and practitioner