Introduction (by Jens Nordvig): Strategic Shifts and a New Era for Sovereign Risk
We live in a world of dramatic structural change, and this means that market dynamics in many macro assets are now increasingly dominated by strategic forces. This, in turn, also means that it can be costly to focus too much on tactical considerations. And this is new.
We have previously discussed this in the context of asset allocation flows out of the USD (see previous letter). Another example is the U.S. budget process. I have worked on macro strategy for 25 years, and the U.S. budget process — especially the long-term deficit situation — has never, in recent history, attracted this much attention. This is important in itself, as it shows we are reaching the limits of fiscal expansion in the U.S. (Related to this, Alex Etra and I will be in D.C. for research purposes in the coming days.)
In the past, the regime was: the more expansionary, the better — for many assets, from equities to the dollar. But with investors now demanding a new type of compensation for risk, including for assets that were previously deemed among the very safest, we are entering a new era for sovereign risk. This is generating many correlation breaks and forcing institutional investors to rethink portfolio construction.
London Client Event: June 10
One of our goals this year has been to connect directly with clients around the world. Our next stop is London on June 10, where Jens Nordvig, Chris Marsh, and Shekhar Kumar will present Exante Data’s latest views on global asset allocation, USD flows, and U.S. fiscal dynamics—following recent research meetings in Washington, D.C. The discussion will be held in a small-group setting with leading institutions along with cocktails.
Please reach out to alicia.chambers@exantedata.com if you would like to connect – we’d love to meet while we’re in town.
Tracking Asset Allocation
As discussed in previous letters, there is intense focus on the ongoing shift away from USD assets. In that connection we have built a new section on our web-site dedicated to this topic. One of the charts is derived from our FlowPro process, and tracks the USD allocation of key global bond funds. We have moved down, heading into May, but the position is hardly extreme yet. This is just one data point, and we want to track this issue holistically.
Hedge Fund Insider Sees Dollar Rout as Biggest Players Eye Exit – Bloomberg
We’ve highlighted our CEO Jens Nordvig recent Bloomberg profile on our company website, where he discusses whether recent currency moves signal a structural shift in the U.S. dollar—driven by evolving global capital flows and investor behavior.
The article builds Bloomberg’s 2016 coverage, which spotlighted Jens’ launch of Exante Data and its focused model serving what was described as “the 0.01%” of institutional investors seeking deeply customized macro insights.
Jens Nordvig on The Compound and Friends Podcast
Our CEO, Jens Nordvig, joined Michael Batnick and Josh Brown on The Compound and Friends podcast, one of the top finance podcasts in the U.S., to discuss key macro themes shaping markets today — including U.S. tariffs, jobless claims, the dollar’s evolving reserve currency role, and the sharp drop in foreign tourism.
CFR World Economic Update featuring Jens Nordvig
Our CEO, Jens Nordvig, spoke at the Council on Foreign Relations’ World Economic Update, offering insights on emerging macro trends, global market shifts, and their implications for U.S. policy.
The conversation, hosted by the Maurice R. Greenberg Center for Geoeconomic Studies, focused on the most pressing economic developments shaping the global landscape this quarter. Don’t miss this important discussion.
Client Feedback Spotlight
Here’s what our institutional clients are saying about working with us:
“You guys are the best in the business so it’s pretty clear for me that it would be good to have access to your platform at the new firm as well.” – Asian Macro PM