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Credit Suisse’s Pozsar's Big Shorts Surrounding “Bretton Woods III”

CROSS ASSET

Credit Suisse’s Zoltan Pozsar notes that “The rise of Bretton Woods III - the new monetary world order that we’ve been busy imagining since the outbreak of the war - and the corresponding rise of (1) the renminbi, (2) commodities, and (3) monetary gold as reserve assets to upend the dominance of the U.S. dollar and the “exorbitant privilege” mean a relative decline of the ancien régime monétaire and its instrument: the Eurodollar. Not a demise of the Eurodollar. A relative decline of it, which should naturally give rise to a set of “big shorts”. The big shorts will include the U.S. price level (shorting inflation expectations), shorting policy rates, shorting the curve inversion (the yield curve has gone mad), and shorting some U.S. dollar FX pegs and the U.S. dollar versus the renminbi.”

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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