Markets entered the second half of 2025 priced for ongoing elevated growth, disinflation, high liquidity, and a persistence of the U.S. exceptionalism that dominated the last decade and a half. That’s according to Bob Elliott, co-founder, CEO, CIO of Unlimited Funds, who seeks the kind of mispricing opportunities for investors that underpin global macro hedge funds.
Evidence of this positioning is apparent across asset classes and categories. Stocks versus bonds (on a risk-matched basis) are one of the easiest places to see these growth expectations.
The post-April tariff crash recovery of stocks versus bonds is an unprecedented one historically. The surge is one “only matched with the post-depression recovery and the early 80s when extremely high inflation favored stocks as a hard asset more than a growth one,” Elliott explained.
While the rest of this year may prove a bit challenging for earnings, expectations currently sit at double-digit percentage growth (16%) in 2026. They appear even stronger further out, with price-to-earnings near 22x again. It will create an environment of extremely low earnings yield compared to long-term real yields.
See also: Unlimited Funds’ Bob Elliott on the Next Evolution of Replication
Bonds, Inflation & the Tightrope Walk of Market Expectations
Bond market positioning also reflects expectations of elevated U.S. real yields and real growth. Elliott compared it to the “pre-GFC boom period.” Despite dollar weakening, it still sits well above historical averages relative to foreign currencies. Meanwhile, markets price in stable inflation around 2%. As such, current market predictions anticipate a number of interest rate cuts this year, driving further liquidity.
Market pricing paints an optimistic picture for the second half and beyond. It also prices optimal outcomes across a number of risk factors. As of the end of the first half, these risk factors remained both elevated and largely uncertain.
“Those long stocks, overweight US assets, or underweight bonds will require an even rosier growth outcome than currently priced into these assets to generate returns above long-term risk premiums. At this point it is a very high hurdle,” explained Elliott.
The only way to achieve such an outcome would require drastic changes to current policies, like significant tariff reductions, aggressive rate cuts, or a strong scale back of restrictions on immigration. “Absent those kinds of moves, the US instead continues to march down the path of a late cycle environment of eroding growth, above target inflation, and eroding international demand for its financial assets,” Elliott said. “A combination far from what is priced into markets at this point.”
How Investors Can Capitalize on Market Mispricing
Global Macro hedge funds seek to capitalize on mispricing opportunities in markets worldwide. The Unlimited HFGM Global Macro ETF (HFGM ) offers access to global macro hedge fund strategy with the benefits of an ETF wrapper.
HFGM takes long and short positions across equities, fixed income, currency, credit, and exchange rate markets. It seeks to capture the alpha potential of global macro hedge funds. It then combines global macro benefits with the tax efficiency and fee savings of an ETF wrapper.
HFGM uses a proprietary, data-driven approach that seeks to identify global macro managers’ current positions. It then replicates the positions in its portfolio, investing in long and short positions in futures contracts and a basket of ETFs. The ETF offers similar returns to the global macro hedge fund sector with twice the volatility of the sector, a strategy that may yield outperformance.
The fund is managed by Elliott, who brings more than two decades of systematic global macro investing experience to the table. HFGM has a management fee of 1.00%.
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