Inflation/Deflation
We assess where emerging markets debt is on a strategic and cyclical basis. We find it has benefited from local central banks boosting their inflation-fighting credentials and governments improving financial stability. As a result, EM debt is behaving less like a risk-on asset, changing the role it plays in a global portfolio. We also expand our asset allocation playbook by assessing how the asset class behaves across the business cycle. While EM debt is more than a risk-on play, we suggest investors stay cautious on a cyclical horizon.
US Investment grade and high yield spreads have tightened 39 and 133 bps since their October 2023 highs, resulting in the outperformance of both fixed income sectors relative to equivalent-duration Treasuries. Still robust economic growth in the US…
Our US Beige Book monitor – which we use to gauge changes in the language of the Fed’s report – continues to signal lackluster US economic conditions. Historically, the monitor has closely tracked real GDP growth in the US. However, the long standing…
According to BCA Research’s Foreign Exchange Strategy service, Australia’s macroeconomic environment validates a long AUD position, especially at the crosses. The market expects that the RBA will cut interest rates soon, but that is not likely when we look…
BCA Research’s Bank Credit Analyst service ranks the major economies by their economic and financial performance under various categories. In the inflation category, the surprising top award goes to Italy, a country which historically has tended to have…
Despite the hotter-than-expected US CPI report for February, the S&P 500 rallied on Tuesday and closed at a fresh record high. Equity investors were unphased by the release and appear to have come to terms with projections that 2024 rate cuts will not be…
US headline CPI inflation accelerated from 0.3% m/m to 0.4% m/m in February, in line with expectations. A rise in gasoline prices and shelter inflation accounted for 60% of this increase. Meanwhile, the annual rate of change in the headline index unexpectedly…
Chinese stocks are experiencing their longest rally since the country’s exit from Covid restrictions over a year ago. The MSCI Onshore and Investable indices (in USD terms) have gained 15.8% and 9.1% respectively since February 5th, with the former…
Although the Atlanta Fed GDPNow estimates for Q1 have been trending lower, the latest 2.5% print (which is down from 3.4% a month ago) still suggests that economic conditions are resilient in the US. Yet small business owners are less optimistic. The results…
