It is interesting how fiscal deficits are starting to become topical. Central banks have been and are still tightening and fiscal stimuli have helped to keep economies alive. Yes, the rate hike cycle is coming to an end, but QT is doing its thing regarding liquidity in the back. As much as central banks could not ease any longer as all of a sudden inflation stood in the way of easy money, governments now start to feel that deficits beyond 100-120% debt/GDP are concerning markets and need to be financed. The European Union btw used to have a debt/GDP ceiling of max 60%! The buyer of the last decade, i.e. in majority the central banks, is not there any longer for all the issuance that will meet the cash that sits on the side-lines. Higher rates will be the consequence despite a rate hike cycle ending. It won’t help that the BOJ now is starting to stop its yield curve control and potentially trillions of Japanese investments finding its way back to markets back home in the land of the rising sun. China is easing, but fiscal stimulus is also running into headwinds for precisely the same reasons. Huge fiscal deficits. Is a period of generally tighter fiscal pockets + QT upon us? The U.S. yield curve has recently started to steepen from a record inversion. That is usually btw the point when risky assets feel the heat. Go back in history, the inversion signalled problems, but only when the steepening started did we see sell-offs. The central bank put is not available while inflation is above targets. Valuations overseas are demanding and bond yields are rising (becoming more attractive vs equity investments). I remain someone who is fairly sceptical regarding broader equity rallies. Relative trades are the name of the game for me. Sayonara.