The Macro Minute: Will Paradigm C, a.k.a. “Run It Hot” break the global bond market?

Global financial markets face a transition from "running hot" to a "default via debasement" phase, characterized by central bank yield curve control to sustain the AI CapEx bubble. While near-term volatility presents buying opportunities, a looming secular bear market threatens to mirror the decade-long recoveries required after the 2000 and 2008 crashes. Current geopolitical instability and populist demands make deficit reduction unlikely, forcing monetary authorities to support asset prices at all costs. Successful navigation of this environment requires avoiding "Type II errors"—the failure to exit trending bear markets or participate in bull runs. Investors under 40, who have primarily experienced rapid "V-bottom" recoveries, are particularly vulnerable to an upcoming multi-year downturn that may take over a decade to return to previous highs. Prioritizing capital preservation through disciplined trend-following ensures portfolios avoid the devastating drawdowns typical of these rare but destructive secular cycles.