Understanding the Global Markets
The global macro layer is where the biggest forces operate. Central bank liquidity is the master variable: since the 2008 crisis, the combined balance sheets of the major central banks have tracked global asset valuations remarkably closely, so watching whether the world's central banks are collectively easing or tightening tells you which way the tide is flowing. The yield curve adds the recession dimension, warning when the world's benchmark bond market expects a slowdown. Commodities complete the picture: the copper-to-gold ratio captures the balance between growth optimism and defensive fear, while oil tracks inflation pressure. Read together, these three indicators describe the environment every national market operates within. When liquidity is abundant, the curve is positive and commodities signal growth, risk assets tend to thrive; when liquidity contracts, the curve inverts and defensive metals lead, caution is warranted worldwide.