Is the Free Lunch Over?

Chinese manufacturers exported inexpensive goods, allowing US consumers and firms to enjoy stable inflation and high margins. Meanwhile, China reinvested part of its surplus into US Treasuries, becoming its major holder.

But today, the United States’ exorbitant privilege appears at risk.

We draw on history as well as our experience to navigate this environment.

We focus on geopolitical alpha as well as fundamental and macro drivers. We see more volatility in the second half of the year coming from rising term premia, increasing dispersion across sectors, and continued rotation from US assets to the Rest of the World.