Is the Risk-On Trade Breaking Down? w/ Andreas Steno & Mikkel Rosenvold | Macro Mondays

Market volatility dominates the current landscape as concerns over AI development, geopolitical tensions, and impending interest rate hikes converge. Recent calls from AI leaders to slow frontier development appear to be a strategic political hedge rather than a genuine safety concern, aimed at securing government support amidst a competitive race against China. Simultaneously, the hit to the Saudi Yanbu pipeline has pushed oil prices higher, complicating the economic outlook and challenging the current administration's policy agenda. Despite these pressures, market reactions remain surprisingly muted, suggesting that investors have already priced in a pessimistic scenario. With the FOMC meeting approaching, the focus shifts toward data-driven guidance rather than forward-looking rhetoric, as the market anticipates further rate hikes. The prevailing sentiment indicates that the dollar may underperform relative to other central banks, providing a potential buffer against the ongoing macroeconomic uncertainty.