TT International Fund, a global macro strategy, lost 2.93% in the last month, pulling the year to date return down to +2.23%. TT International fund lost in shorts in GBP against the USD and was also not successful in its positions in European equities, according to details from an investor letter seen by ValueWalk. The fund managed to gain in long Chinese yuan positions against the USD, shorts in emerging market currencies versus USD, and in long gold positions.

Global Macro

Eurozone recovery hangs on increased bank lending, says TT

The fund was able to gain in gold as the precious metal rose in response to a threat of war in Syria, and the fund also gained as emerging markets came under severe pressure on heels of a likely QE taper in U.S. TT International notes that European equities have seen record inflows over the last couple of months and balance sheets of peripheral European countries have also strengthened. Current account deficits are reducing, savings are increasing and the general state of economy is moving towards a balance. The fund notes that GDP has moved up in Spain, Portugal and Italy and PMIs are also improving. Despite of all the encouraging signs, a sustained recovery depends on an increase in bank lending and without it, the rally can only go as far as a year. In the monthly letter, it is pointed out that the notion that Germany would be more forthcoming with cash in case of re-election of the same regime could be a false hope. The likelihood of Germany being more easy with its cash would depend on how the coalition forms.

The fund has a bearish position in U.S. ten year treasuries and thinks that a yield above 3% would just be a return to normalcy. The fund closed its shorts in EM currencies, and increased short in JPY against USD and AUD in last month.

MaxQ Macro nets a surprising gain in August

Meanwhile another macro fund, North Asset Management’s MaxQ Macro Fund, was up 1.43% last month, which brought its YTD return to +11.68%. MaxQ has shorts in EUR, CAD, JPY and CHF against the USD, according to the monthly investor update. The macro fund has a long position in NOK vs SEK, which the fund is pretty confident about as investments in Norway increase and Norwegian krone continues to strengthen. The fund is also short South African government bonds. MaxQ has a theme of shorting commodity dependent currencies.

MaxQ’s monthly commentary conveyed an expectation of a period of high volatility after the Fed’s meeting yesterday. In the Eurozone the fund is looking for opportunities in France where sovereign bond yields remain unaligned to the debt ratio, and the fund hopes to trade in French credit on this theme after 2014 budgetary details are published.