Outrageous Predictions
Executive Summary: Outrageous Predictions 2026
Saxo Group
Read Saxo's Outrageous Predictions for 2026, our latest batch of low probability, but high impact ev...
You can access both of our platforms from a single Saxo account.
Why (and how) you need to be long inflation
Trade View 5 minutes to read
Strategic Trade / Sell
Steen Jakobsen
Chief Investment Officer
Summary: Policymakers are taking yet another dip in the 'pretend-and-extend' punchbowl as both monopolies and central banks snap up assets across the board. No market trades freely, price discovery is zero, and it is time to get long inflation.
Instrument: 10-year US Futures
Price Target: not specified
Market Price: spot 121 19.5/32
Background:
The ongoing talk about Modern Monetary Theory is getting out of control. Yesterday, I sent an internal note to my team outlining my view on MMT and the Great Policy Panic:
"Rarely have I seen such a turnaround in the dominant narrative in such a short time... it's almost impressive (the speed and scale of the turnaround, that is – not MMT!). It appears as though we need to adjust out policy response book to reflect another leg of pretend-and-extend now that quantitative easing and low interest rates are finally being viewed as inadequate.
It's remarkable how no one is discussing the fact that socialism, or statism, is already here! After all:
• No market trades freely.
• There is zero price discovery.
• There is no marginal cost of capital allocation.
In the face of all this, we see monopolies and central banks continuing their run of purchasing across the board. Without testing the premise, of course, we are doomed to make further mistakes."
My conclusion?
Be long – very long – inflation, particularly as we head into the growth low in Q4'19/Q1'20!
All of this MMT talk, as well as the concept of "no price for infinite debt," is creating the potential for a major move in US interest rates. For 2019, the 10-year yield is way, way behind the move inflation. Look at the charts below on how five-year/five-year swaps, a key proxy for inflation expectations, are rising fast.
Also read the following:
• An MMT response on what causes inflation (Financial Times)
• An 'explanation' of MMT (from Bernie Sanders' adviser Stephanie Kelton)
Our trade on this would be: sell 10-year US Futures at spot 121 19.5/32 with a close at 122-29 (daily)
"Rarely have I seen such a turnaround in the dominant narrative in such a short time... it's almost impressive (the speed and scale of the turnaround, that is – not MMT!). It appears as though we need to adjust out policy response book to reflect another leg of pretend-and-extend now that quantitative easing and low interest rates are finally being viewed as inadequate.
It's remarkable how no one is discussing the fact that socialism, or statism, is already here! After all:
• No market trades freely.
• There is zero price discovery.
• There is no marginal cost of capital allocation.
In the face of all this, we see monopolies and central banks continuing their run of purchasing across the board. Without testing the premise, of course, we are doomed to make further mistakes."
My conclusion?
Be long – very long – inflation, particularly as we head into the growth low in Q4'19/Q1'20!
All of this MMT talk, as well as the concept of "no price for infinite debt," is creating the potential for a major move in US interest rates. For 2019, the 10-year yield is way, way behind the move inflation. Look at the charts below on how five-year/five-year swaps, a key proxy for inflation expectations, are rising fast.
Also read the following:
• An MMT response on what causes inflation (Financial Times)
• An 'explanation' of MMT (from Bernie Sanders' adviser Stephanie Kelton)
Our trade on this would be: sell 10-year US Futures at spot 121 19.5/32 with a close at 122-29 (daily)
Parameters:
Entry: spot 121 19.5/32
Stop: 122 28/32 on the close
Target: 118 ½
Time Horizon: long term
Also, please review the charts below.
Management And Risk Description:
For those of you who are inclined to learn from history, I implore you to read Paul Volcker's book 'Keeping At It', noting particularly the chapters on how he and then-Treasury Secretary Connally took the US out of the Bretton Woods agreement with the policy at the time being: controls, tariffs (on Germany), devaluing the dollar and trying to ditch the trade deal in place with Canada!
Latest Market Insights
Outrageous Predictions 2026
-
-
Outrageous Predictions
A Fortune 500 company names an AI model as CEO
Charu Chanana
Chief Investment Strategist
Can AI be trusted to take over in the boardroom? With the right algorithms and balanced human oversi... -
Outrageous Predictions
Despite concerns, U.S. 2026 mid-term elections proceed smoothly
John J. Hardy
Global Head of Macro Strategy
In spite of outstanding threats to the American democratic process, the US midterms come and go cord... -
Outrageous Predictions
Dollar dominance challenged by Beijing’s golden yuan
Charu Chanana
Chief Investment Strategist
Beijing does an end-run around the US dollar, setting up a framework for settling trade in a neutral... -
Outrageous Predictions
Obesity drugs for everyone – even for pets
Jacob Falkencrone
Global Head of Investment Strategy
The availability of GLP-1 drugs in pill form makes them ubiquitous, shrinking waistlines, even for p... -
Outrageous Predictions
Dumb AI triggers trillion-dollar clean-up
Jacob Falkencrone
Global Head of Investment Strategy
Agentic AI systems are deployed across all sectors, and after a solid start, mistakes trigger a tril... -
Outrageous Predictions
Quantum leap Q-Day arrives early, crashing crypto and destabilizing world finance
Neil Wilson
Investor Content Strategist
A quantum computer cracks today’s digital security, bringing enough chaos with it that Bitcoin crash... -
Outrageous Predictions
Taylor Swift-Kelce wedding spikes global growth
John J. Hardy
Global Head of Macro Strategy
Next year’s most anticipated wedding inspires Gen Z to drop the doomscrolling and dial up the real w... -
Outrageous Predictions
SpaceX announces an IPO, supercharging extraterrestrial markets
John J. Hardy
Global Head of Macro Strategy
Financial markets go into orbit, to the moon and beyond as SpaceX expands rocket launches by orders-... -
Outrageous Predictions
China unleashes CNY 50 trillion stimulus to reflate its economy
Charu Chanana
Chief Investment Strategist
Having created history’s most epic debt bubble, China boldly bets that fiscal stimulus to the tune o...
Disclaimer