Something that's made this energy move very challenging for fixed income is that X-asset has not shown a lot of "interest" in equilibrating this move. Equites care about AI and FX hasn't moved. Markets need a place to equilibrate this shift and right now its all going to rates.

There is a lot of applaud for Carney's speech at Davos yesterday, and I get why. However, this "rupture" didn't happen last year, it happened a while ago. Canadian GDP per capita has been stagnant since 2011. Tariffs on Canada happened last year.

I am not saying it is right or wrong, but I think a lot of market pricing into 2026 is based on the assumption that these two things (AWP vs. NGDP) will diverge. When historically, that is quite rare in any durable way.

It's interesting that so many of the assumptions for strong GDP in 2026 come from the fiscal impact in Q1. However, according to many models, fiscal is going to be an incremental drag on GDP growth after after the big Q1 jolt.

It's pretty amazing to me that in the context of this chart (US 2y rate minus Japan 2y rate), and a fairly material move lower in the broad dollar index, that USDJPY is unchanged on the year.

Something I've been highlighting in my client notes is that the current richness of USD is the byproduct of three major imbalances. And the residual of these imbalances is the capital account surplus. As we head into 2026, there seems to be a path for some level of normalization.