Michael Hartnett at BofA has some ideas.
Tale of the Tape: UK govt announces biggest fiscal loosening since 2009ex. Covid (Chart4)…UK gilt yields surge 25bps to YTD highs; bond vigilantes biding time in 2020s era of ongoing fiscal excess; price action says US risk assets need financial conditions to ease in Q4 for rally (risk parity ETFRPAR-5% in Oct), and big “risk-off” if combo of higher Treasury yields and weaker US$ emerges (see UK Sep’22, US Oct’23).
The Biggest Picture: of all the contrarian post-election trades (“sell Trump rip,” “buyHarris dip,” “Trump wins, China rallies”…),the most contrarian is “buy bonds” because enext administration acts to reduce US budget deficit in ’25, acknowledging an electorate unhappy with cost of living (likely why low Biden approval past 3 years despite low U-rate–Chart2)…would be most bullish midterm outcome for stocks.
