Kathy Jones

Treasury yields rose across the curve (10Y approaching 4%) despite the equity selloff. Typically, war triggers a "flight to safety" (buying bonds, yields down). However, because this conflict drives energy prices up (Qatar LNG/Oil), it is an *inflationary* shock. The Fed cannot cut rates aggressively if inflation spikes, forcing yields higher. SHORT BONDS. The "Fed Put" is constrained by rising commodity prices. The conflict causes a severe global recession, forcing the Fed to cut rates despite inflation.

Kathy Jones notes a "diversification away from the US" and that investors are moving into markets that "have more potential to do better," specifically citing Emerging Markets. Alex Wolfe confirms a pickup in flows into Europe and Japan. The US Dollar is softening (or rangebound), and the Fed is easing (albeit slowly). A weaker dollar historically boosts Emerging Markets and non-US equities as capital rotates out of crowded US trades seeking better valuations. LONG non-US assets to capture the capital rotation. A resurgence in US inflation forcing the Fed to hike, strengthening the USD.

Kathy Jones notes a "diversification away from the US" and that investors are moving into markets that "have more potential to do better," specifically citing Emerging Markets. Alex Wolfe confirms a pickup in flows into Europe and Japan. The US Dollar is softening (or rangebound), and the Fed is easing (albeit slowly). A weaker dollar historically boosts Emerging Markets and non-US equities as capital rotates out of crowded US trades seeking better valuations. LONG non-US assets to capture the capital rotation. A resurgence in US inflation forcing the Fed to hike, strengthening the USD.