#globalmacro

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On the surface, Italy looked calm today. The IT40 index ticked up to about 43,516, a small +0.37% move that, in any other week, wouldn’t grab much attention.

But markets don’t live on the surface.

Behind that polite green number is a world where Japanese yields are spiking, crypto just got hit again, and bond markets are trying to figure out what happens when central banks refuse to stick to the old script.

1. Italy’s Curve: 3.47% Says “Pay Me to Take the Risk”

The 10-year Italian BTP now yields around 3.47%. The 1-year BOT is closer to 2.03%.

Those two numbers tell you a lot:

If you stay short, you get less income but less duration pain if yields jump again.

If you move out to 10 years, the market is saying: “Here’s extra yield. In exchange, you live with rate and spread risk, plus Italy’s ongoing debt story.”

Add in the possibility of up to €14 billion in new issuance, and you have a market where funding is ongoing, but investors will keep asking where the fair yield really sits.

2. Global Volatility: BoJ, Bonds, Crypto and the Risk Switch

While Italy quietly drifts higher, global risk sentiment has been hit by:

Talk that the BoJ could raise rates, pushing Japanese 10-yr yields to a 17-year high.

A selloff in global bonds and crypto, reminding everyone that “risk-free” never really means risk-free.

Gold doing its usual job as a shock absorber, while oil inches up on supply tensions and inflation chatter.

This matters for Italy because investors don’t allocate in a vacuum. If global bond volatility spikes, they revisit:

How much peripheral exposure to hold.

Whether to add, trim or hedge Italian sovereigns.

How much credit risk makes sense when the world is jittery.

3. FX-Hedged Euro Bonds: The Hidden Yield Story

One underappreciated angle is the FX-hedged yield on euro bonds for non-euro investors.

Recent research from large asset managers suggests that, once you hedge the currency:

Euro-area sovereigns (including Italy) can look competitive versus U.S. Treasuries.

European high-yield may offer attractive spread compensation with more balanced rate sensitivity than long U.S. investment-grade.

That doesn’t mean “load up.” It means the risk-return equation is more interesting than headline yields alone might suggest.

4. Borsaluxe: Turning Cross-Asset Noise into a Trend Map

Borsaluxe’s Trend-Control approach is built for days like this:

It looks at IT40, BTP yields, credit spreads, FX and global rate moves together.

It tags where conditions are stable and where risk is rising.

It recognises that parts of the market — real-estate bonds, private equity, structured credit — are simply not as transparent, and treats that opacity as a risk factor, not a footnote.

The idea isn’t to promise perfect timing. It’s to help investors see the structure of the market, not just the latest headline.

Smart guys are the most dangerous. They are the most prone to overconfidence and the most susceptible to overthinking--both deadly sins in money management.

Nowhere does overthinking seem more prevalent than in global macro. The less one knows about a topic, the easier it is to elaborate a story that fits one’s biases and ideology. And there is no shortage of people who are trying to make a living pitching to our knowledge gaps and darker instincts. These days, terrifying macro stories rush to fill our information void with disturbing speed and regularity.

My response: fight to keep it simple. And I say fight because I have the same basic impulses as everyone else. It is extremely hard to not overthink—all the more so if one has a deeply ingrained fundamental background.

‘Keeping it simple’ for me means latching onto a couple of overarching themes in which I believe strongly and using them to tune out as best I can the macro noise du jour.

In today’s environment, the anchor themes are two.

1.       Disaster Myopia. We are still living in the long shadow of the global financial crisis. Six years have passed, but we still return to ‘that place’ far too quickly. Worst case scenario, daily. This ease of recall induces us to over forecast tail events—even if Macroggeddon is 0 for 500 by now. Erring on the side of optimism is still the money trade.

 2.       Longest, shallowest cycle ever. The world continues its deleveraging. The US appears to be leading the rest of the world in the process.  But the extrapolation of growth optimism on which all cycles end is just not there in the US—or anywhere else for that matter. And it doesn’t seem imminent, either. This implies two things: (1) the odds of a new recession in the US are low (you can’t commit suicide jumping out of the basement window), and (2) since bear markets typically come when economic cycles turn, a bear market in US equities is unlikely until the economy gets jacked up on excessive investment and hiring.