Surviving the Great Recession of 08/05/2024

Insights and Strategies for Growth, Risk, and Interest rates for the most recent macro moves...

Hello everyone,

First and foremost, congratulations on surviving the great recession of 08/05/2024

Let's talk about the critical importance of our current position with interest rates and risk assets. When implied volatility spikes, it's a prime opportunity to generate returns. That's our focus today.

In our last macro report, we discussed the 2-year interest rate and its associated risk and reward. Since then, the 2-year rate has dropped about 100 bps.

Understanding the macro context behind this move is crucial. In 2023, strong growth allowed the Fed to maintain a higher spread between Fed Funds and inflation. The Atlanta Fed GDP-nowcast peaked alongside the 2-year rate's rise.