The big trade of 2023 is the inevitable shift in China towards living with covid. We've seen some enthusiasm for the trade after the People's Congress but that has fizzled.
Today was the first meeting of the new Politburo Standing Committee and they called for the unwavering support of the country's covid policy even as they face the worst outbreak in a year.
The Shanghai Composite was down 0.4% and Hang Seng down 1.7% today.
There's talk of a chance in policy in the springtime and that could come just as the market grows comfortable with a peak in Fed rates and a potential shift to cuts. Combined, that would set up a rip in risk trades.