Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

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Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Cross Asset Strategy

<div>The prospect of significant fiscal support for aggregate demand under the incoming Biden Administration has persuaded the Fed to wait until a H2 recovery unfolds before reviewing policy options. Bond investors have discounted faster economic growth, but they have not yet been persuaded that the Federal Open Market Committee (FOMC) will seek to embrace a more hawkish policy outlook in the near future.</div>
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<div>Tighter US monetary policy adjustment will be initiated via asset purchase changes, but the FOMC will need to tread carefully to avoid prematurely unhinging short-term interest rate expectations, thereby committing the same mistake as in 2013. In the event of changing asset purchases, any simultaneous yield increases in both the short and long-end segments of the interest rate term structure could indicate the onset of another taper tantrum.</div>
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<div>The arrival of the Biden Administration during the COVID-19 pandemic has removed any prospect of fiscal discipline over the next two years, thereby sowing the seeds for a return of the bond market vigilantes. The policy agenda of the Biden Administration is more left-of-centre compared to his Democratic predecessors, while a likely increase in borrowing authority later this year suggests spendthrift fiscal policy that could fuel higher inflation.</div>
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<div>Originally, bond vigilantes unleashed their  disapproval of the economic policy backdrop on the Fed during the 1980s, a period of sustained federal government profligacy. The Fed may, however, choose to fight any return of the vigilantes during the current environment due to their desire to boost inflation in order to compensate for past undershooting of the 2% target.      </div>
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The prospect of significant fiscal support for aggregate demand under the incoming Biden Administration has persuaded the Fed to wait until a H2 recovery unfolds before reviewing policy options. Bond investors have discounted faster economic growth, but they have not yet been persuaded that the Federal Open Market Committee (FOMC) will seek to embrace a more hawkish policy outlook in the near future.


Tighter US monetary policy adjustment will be initiated via asset purchase changes, but the FOMC will need to tread carefully to avoid prematurely unhinging short-term interest rate expectations, thereby committing the same mistake as in 2013. In the event of changing asset purchases, any simultaneous yield increases in both the short and long-end segments of the interest rate term structure could indicate the onset of another taper tantrum.

The arrival of the Biden Administration during the COVID-19 pandemic has removed any prospect of fiscal discipline over the next two years, thereby sowing the seeds for a return of the bond market vigilantes. The policy agenda of the Biden Administration is more left-of-centre compared to his Democratic predecessors, while a likely increase in borrowing authority later this year suggests spendthrift fiscal policy that could fuel higher inflation.

Originally, bond vigilantes unleashed their  disapproval of the economic policy backdrop on the Fed during the 1980s, a period of sustained federal government profligacy. The Fed may, however, choose to fight any return of the vigilantes during the current environment due to their desire to boost inflation in order to compensate for past undershooting of the 2% target.      


US Fiscal Outlook: Good for the Economy, but Profligacy Could Usher Return of Bond Vigilantes