Arculus Funds Management

Investing is very difficult around key pivot points. If it were easy everyone would be getting double returns consistently. After a short lull in the economy over the past 6 months, we expect that some time in the March quarter we will begin to see inflation, or at least the factors that will lead to … Read more

During November the market consensus shifted towards the FOMC and ECB remaining on hold throughout 2024. This reflects a forecast that inflation will continue to deflate while unemployment remains low, and the economy keeps growing but at a slow pace. This is the “Goldilocks” scenario. The alternative view is that inflation will begin to rise … Read more

We were surprised last week by the reaction to the slightly better than expected US CPI monthly report. In aggregate the headline month-on-month CPI rate was flat versus a 0.1% forecast and core inflation was 0.2% versus 0.3% expected. A great deal of care needs to be taken when interpreting monthly data because inflation readings … Read more

The week ahead may prove pivotal for the global bond markets. The US has roughly $33 trillion in Federal debt, at an average interest rate of roughly 3%, which generates around $1 trillion per year of interest cost. Based on current expectations, the Congressional Budget Office guesses that the government deficit from 2024 through 2033 … Read more

Interest Rates The markets were caught by a triple surprise last week. Firstly, the Treasury opted to issue less 10 and 30-year bonds and more 3-5 year bonds for its refinancing, then the ISM manufacturing and services PMI data was weaker, and finally the non-farm payrolls were weaker than expected. This brought about what looks … Read more

The markets, at both a bond and currency level, are now forecasting that the RBA has fallen behind the curve with its interest rate moves. The RBA is now expected to increase rates by 25bps at the November meeting and then remain on hold until the February meeting, when a new RBA interest setting board … Read more

The common theme of market strategists over the past 6 months – basically since the Credit Suisse and Silicon Valley Bank events in March – is that the global economy will face a credit crunch that causes a recession. Even though this has been subsequently and self-evidently shown to be an incorrect forecast, the same … Read more