As part of the annual outlook earlier this year, I postulated that 2026 might be a year where Central Banks become largely irrelevant (here). This was followed by the view that monetary policy driven “monetary quantitative easing (MQE)” would be replaced by “Fiscal Quantitative Easing (FQE)” (here) as the Fed’s powers are “cancelled” and replaced by other powers on the way to monetary-fiscal convergence. Based on this I recommended keeping bond durations short, look for a steeper yield curve, hold some precious metals, and if holding a lot of equities, […]
The full note on this important topic can be downloaded at this link: LTA Thinking – Year of Fed Irrelevance Is Almost Complete