Sam Lynton-Brown

Lynton-Brown states, "The Fed will not be cutting rates this year... The US economy is too strong... inflation is contained at above target levels." The market is currently pricing in cuts. If the Fed holds rates steady due to the energy shock while Europe/Asia struggle with higher energy import costs, the interest rate differential and "safe haven" status will drive the USD significantly higher. LONG USD as the cleanest hedge against the geopolitical conflict and sticky inflation. A rapid de-escalation in the Middle East leads to a drop in oil prices and renewed Fed cut bets.

Emerging markets have structural positives from fiscal policy convergence, central bank inflation-fighting credibility, and financial market liquidity improvements, creating a more supportive backdrop despite US rate hikes. The dollar is weaker than fair value, and strong US cyclical growth benefits EM without the typical headwind of a strong dollar.

Oil prices face an explosive spike as inventory deficits turn into outright shortages, with 13-14 million barrels per day of supply lost and no quick recovery even if a deal is reached.

Sam Lynton-Brown stated, "we think the dollar will rally further." He argues the market is underappreciating the positive dollar impact through energy and that the U.S. economy should outperform the rest of the world, supported by energy self-sufficiency and haven demand. LONG on Dollar due to expected strength from economic resilience and safe-haven flows amid geopolitical uncertainty. A sudden de-escalation in Iran reducing haven demand, or if the U.S. economy underperforms relative to expectations.

Sam Lynton-Brown pointed to "U.S. long-duration" as an asset class that should be bullish, with a positive backdrop similar to equities. The Fed is expected to hold rates steady, and the market is positioned for downside in equities, making long-duration bonds an attractive defensive play with potential for capital appreciation. Long-duration U.S. bonds should be resilient and benefit from the current market hedges and a patient Fed. If inflation proves more persistent than expected, the Fed could turn hawkish, leading to higher yields and bond price declines.