The Reflation Trade Was Compromised in Q4-20
Where Macro Meets Markets
In December 2020, I tweeted that the reflation trade would begin to unwind in Q1-21 with a dollar liquidity stress build up. $TLT, $DXY and $GLD bottomed in Q1-21; and U.S. M0 plus Treasuries held by foreigners (dollar liquidity proxy) had been deteriorating rapidly.
Combine that with U.S. lending demand, consumer credit, money supply aggregates and mone…