Macro Pillars

Watch here: youtube.com/watch?v=v7PzWl… Here’s this week’s Macro Pillars midweek update. We walk through how we’re seeing the market through each pillar: government/geopolitics, liquidity, monetary and fiscal policy, technicals, and execution. We also dive into our models and tools, sharing our internal daily process. The market is not giving us one clean broad bull case. It is giving us dispersion. 14-day free trial of Macro Pillars Core: macropillars.com

Another excellent weekly contribution from @YraHarris at MacroPillars. This week, Yra continues to follow the divergences building across grains and energy. He also touches on the rice supply shock, Bessent’s pressure on Trump, Warsh, the Fed, QT, the long end, Japan’s policy mistake, the yen, JGBs, and why the market may be far too complacent. The section on Warsh, QT, and the long end is especially important: “I understand the market moving them higher in anticipation, and with all the talk of higher inflation, but I just don’t see it happening, especially into the election. The market might push this, but it doesn't really have the power to do so in the short end. So if they take it out on the long end, it’s going to be a real problem for Scotty and some others, and I think that’s what scares them the most. In terms of the front-end tightening in the US, with Warsh coming in and embarking on quantitative tightening, there is no way they will actually raise rates. They have to see how it plays out and what effect it has, because they will be curtailing bank reserves in a big way, and we know they already brought in the RMP from 40 to 10 billion. Warsh is smart and respects markets; Powell says he respects markets, but I don't think he does, because in 2018, he made a categorical mistake, as Druckenmiller dubbed it "the double shotgun" approach. If you're doing quantitative tightening, you hold rates; if not, cut rates, and see where it goes.” Sign up for a 14-day free trial to receive the full article and all Macro Pillars research. buy.stripe.com/8x27sNfwK17ld3…

Last week, Australia reported weak employment numbers amid the highest inflation in the developed world (stagflation, anyone?). We have a monthly inflation report out this week, and the Albanese Government has just introduced the largest regressive investment tax changes in Australian history. The chart below is being short AUD/USD and the ASX in yellow, overlaid with the Australian consumer confidence index in black and the Australian 10-2 yield curve in red. We note significant dispersion. We remain short Australian dollars and Australian equities whilst the price stays below the 2007 high marked in black.

Globally, the consumer is broken, with 45-year lows in consumer confidence, and the Michigan survey released on Friday is replicated worldwide. India, Indonesia, Turkey, and many other emerging economies, currencies, and stock markets have been under significant pressure. These countries are selling gold to defend their currencies and buy food and energy; this challenge will not be resolved overnight, even if the War ends (assuming there is a lasting peace deal). The effects of the war are serious, as global energy stockpiles are depleting rapidly, and energy supply in energy-dependent countries is at risk. Goldman says global oil stockpiles are falling at a record pace. When stockpiles run out, the spot price is at risk of exploding, so this “deal or no deal” is imperative. See the Charts below: Indian stocks have been lower since the beginning of the war (2 March marked), and emerging-market currencies are weakening against the USD.

Japan has been giving us some clean case studies lately in healthy vs unhealthy steepening and inflation. A bear steepener is not always bullish. The interaction between FX, equities, and curves is critical, and there are great opportunities for those who can spot the dissonance.

Our liquidity models have tightened considerably, driven principally by the rise in the MOVE index, and the Fed's reduction of the Reserve Management operations from $40 billion to $10 Billion. Live Calculated Value: Models excluding MOVE = YoY %: -2.37% Models including MOVE = YoY % (incl MOVE): 11.89% down from +78% on 20th April 2026 We are wary of the current dissonance between price and our models. From here, we will take instruction from how assets respond around our key dates, and whether we see any meaningful shifts in the curves. If you are interested in following our work, we are currently offering a 14-day free trial to MacroPillars Core. More here: macropillars.com S&P500 in blue, MacroPillars liquidity model, including the MOVE in orange.

Our first MacroPillars midweek update is live. The bond market is starting to say it has had enough, and yields are beginning to come for the AI trade. With liquidity deteriorating, bond volatility rising, and positioning still very long, the bull case now needs a lot to go right to sustain current levels. In this video, we walk through our daily process, the pillars, and how we are trading this market right now. Watch here: youtube.com/watch?v=1v4Y8h… 14-day free trial: macropillars.com

@Jboss47638298 Thank you for the repost, Jan. We are glad you are following along.

I like the thesis behind the trade idea. Worth a read. I posted last week how I am currently trading this. Long DBA and INFL

We continue to maintain our primary position: Short the underprepared energy and food importers (ASX and DAX), Long food (Corn, Wheat, and Soybeans). The position continues to trend well and has been assisted by the agriculture deal announced from the Trump–Xi summit, an outcome we had been anticipating through the pillars. Weekly Report 9th May 2026: ap5.cmail20.com/t/t-e-wddjhkl-… If you are interested in following our work, we are currently offering a 14-day free trial to Macro Pillars Core. Head to our website to find out more: macropillars.com

Headwind ahead for #gold before the move higher. "It is clear to us that, as serious energy-dependent countries see their currencies weaken, their central banks are selling gold to defend their currencies and using the proceeds to fund goods and energy imports" @MacroPillars

OUT NOW - Andrew Perry of @MacroPillars (ex-Tudor): - a "dangerous period for markets" - long U.S. stocks & agricultural commodities - short German & Aussie stocks Apple shorturl.at/5a2L7 Spotify shorturl.at/FmJMZ YouTube rb.gy/c3qdaa 1/3

Macro Pillars has been concerned that, while AI names have been the key driver of risk assets, metals, in particular, Gold, have continued to underperform. It is clear to us and the data (see link) that, as serious energy-dependent countries see their currencies weaken, their central banks are selling gold to defend their currencies and using the proceeds to fund goods and energy imports. India, via President Modi last weekend, told the nation not to buy gold, and Turkey, Russia, and Poland have been selling Gold. bullionvault.com/gold-news/gold… Since the start of the war on March 2, there has been a strong relationship between gold and emerging market currencies. Today, the currencies of India, Turkey, and South Korea have weakened, as has gold. (See Chart, Long USDINR(India), Long USDTRY, overlaid with gold inverted.) Asian markets, including Korea (KOSPI), and the metals are broadly under pressure today. With the Strait closed and food and energy prices remaining high, this is continuing to place stress on yields globally across the curve. To add to the stress, PPI in the US and Japan was significantly higher than expected. As noted this week, the Fed's monthly RMP was reduced to 10b, compared with the expected continued 25b down from 40b, which tightens liquidity. If the emerging currencies continue to weaken, we expect metals to come under increased pressure, along with the overall market.

Andrew Perry @MacroPillars_ joined @JackFarley96 on Monetary Matters to discuss the current market setup, the Macro Pillars process, and how we have been positioning through the recent volatility. They covered the interaction among liquidity, curves, policy, geopolitics, and price responses, and how that framework has helped us identify and risk-manage some great opportunities over the past few months. Great conversation with Jack and a strong overview of how we think about markets through the pillars. Watch below. youtube.com/watch?v=KtaugQ…

Macro Pillars has been focused on the bear steepening of global long-end yields in recent weeks and the support provided to equities, particularly in the US and Japan. Bear steepening requires investors to take on inflation hedges, i.e., buying equities. Jurisdictions such as Australia and the UK presented opportunities (Long AUDUSD/Short SPI and Long GBPUSD/Short FTSE) from this steepening, as bear flattening on their individual curves has supported their currencies whilst weakening their domestic equities. The risk now is that the US curve, as the dominant global curve, is resuming its war-driven bear flattener — short-end rates rising faster than long-end rates. We have seen attempts at this since 17 April, and again this week after last night’s hotter US inflation number, which has seen more tightening priced across jurisdictions into year-end. Our view is that the bond market is now starting to say: if risk assets are not going to take this demand shock seriously, then the bond market will come for risk assets itself. A US bear flattener should support the US dollar, tighten financial conditions, and create problems for risk and metals. As you may recall, the bear flattener on the 2nd of March caused big trouble for the metals. We covered this back on 15 March, drawing comparisons to 2022. We are not saying this is an identical set of circumstances, but the signal is similar enough to have our full attention. Earlier this week, silver and copper were being pulled into the AI dependency trade, while gold could not get off the canvas. If silver and copper start to underperform gold, that gives us further confirmation that this bear flattener is starting to bite. (See chart below)

Today’s May 2026 WASDE report reinforced the Macro Pillars view that agricultural markets are transitioning away from traditional surplus-driven pricing frameworks and into an environment increasingly dominated by geopolitical fragmentation, strategic resource competition, biofuel expansion, weather volatility, and shifting global capital flows. While current inventories across parts of the grain complex remain adequate, the forward-looking structure continues to tighten as acreage shifts, lower production forecasts, and expanding renewable fuel demand reduce future supply cushions. Macro Pillars retains our primary position of being short European and Australian equities against long agricultural commodities via Corn, Wheat, and Soybeans. (See chart below)

Check out Andrew's recent interview with @Macro_Hive. youtube.com/watch?v=r7BeuS…

Macro Pillars caught up with our good friend @YraHarris on today’s Monday Macro call. Yra also contributed to this week’s long-form note, sharing his thoughts on the Trump-Xi trade summit and the potential implications for agriculture, commodities, China, and the broader market setup. Watch our market breakdown and catch-up with Yra below, including how we are setting up the week ahead. youtube.com/watch?v=OM8DOc…

With the Treasury retaining its Quarterly Refunding Guidance for the next quarter and pushing out the coupon increase to FY27, markets took this very positively, with all stocks and metals trading higher overnight. We will add this week's date to our scorecard, and while any asset is above this week's low, you cannot be short anything! Macro Pillars believe we have seen this movie before. While we have no idea whether or not this is a bubble, there are similarities to 1999, the internet bubble that saw the Nasdaq rally 128% from August 1999 to March 2000. See chart one. The NASDAQ fell 15% prior to that rally, and at the time, the market called the top before the blow-off top into March 2000. The sell-off from March 2000 was devastating, falling 85% into October 2002. Is it a bubble? We don't know; however, our liquidity models (ex-capex liquidity) are neutral. The market over the last 2 weeks has shifted from a bear steepener to a bull steepener (bear steepener = inflation hedges; bull steepener signaling recession concerns). This change in the yield curve is signaling that the real economy will, at some point, have to deal with the energy and food shocks emanating from the Middle East. That said, do not fight a trend clearly fuelled by the AI capex boom, with countries like South Korea (Kospi), a major chipmaker and AI manufacturer, and Taiwan up by 50% in 5 weeks. Remember, our job is to make money, not to be right.