The Market Huddle Straws Accumulating on The Camel’s Back (Guest: Brian McCarthy)
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Mar 14, 2026 Brian McCarthy, managing principal of MacroLens and macro strategist specializing in fixed income, rates and FX. He discusses market reactions to the Middle East conflict and why hiking into a supply shock is dangerous. He questions the sustainability of China optimism and flags cheap two-year dollar‑CNH calls as insurance. He also outlines risks from credit stress, energy shocks and breadth deterioration in equity markets.
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SOFR Futures Are Chasing Oil Higher
- Front-end yields are tracking oil one-for-one, implying markets have priced out expected Fed cuts as oil rises.
- Kevin Muir shows December 2026 SOFR futures moved with one-year-ahead WTI quotes.
Private Credit Is Driving Recent Credit Widening
- Private credit stress is the proximate cause of recent investment-grade widening and is more likely the driver of credit moves than macro growth alone.
- McCarthy sees it as a contained spillover if nominal growth stays ~5%.
China Rally Is Narrative Not Earnings Driven
- Recent China optimism is narrative-driven with earnings flat over 15 years, making rallies likely to round-trip.
- McCarthy calls China's system focused on CCP power, not profit, and flags rare-earths as a strategic weapon.