Since the onset of 2018, the U.S. has slapped various tariffs on China, the most important of which was 10% on $200 billion worth of Chinese goods. Assume for the sake of argument that only China and the U.S. were trading…
Highlights The clear and present deterioration in Sino-U.S. trade negotiations suggests the dollar will remain bid in the near term. While the probability of a trade deal has fallen, the situation remains highly fluid, and the odds…
Feature In lieu of our regular Weekly Report this week, tomorrow we will be publishing a joint Special Report on the Chinese housing market with our Emerging Markets Strategy service, authored by my colleague Ellen JingYuan He. Ellen…
The lack of more pronounced strength in pro-cyclical currencies such as the Australian, New Zealand, and Canadian dollars suggests that caution prevails. Our Foreign Exchange Services team’s bias is that currency markets…
Under current market circumstances the dollar would usually have been used as insurance. However, with U.S. interest rates having risen significantly versus almost all G10 countries in recent years, the dollar has itself become…
Highlights Recent data suggest central bankers remain behind the curve in boosting inflation expectations. Ergo, expect a dovish bias to persist over the next few months. Our thesis remains that global growth is in a volatile…
Highlights In Indonesia, investors are ignoring the weakness in global growth, which is an important driver of the country’s financial markets. The Indonesian currency, equities and local currency bonds all remain vulnerable. We…
Indonesian financial assets have benefited from the Federal Reserve’s dovish turn and corresponding fall in U.S. bond yields (Chart I-1, top panel). Moreover, the market is cheering President Joko Widodo’s lead in the…
Highlights The March data brought the first signs of a stabilization in China’s “hard” economic data, albeit from a weak level. The April PMIs disappointed, but they remained in expansionary territory; this is in…
Feature What Could Sour The Sweet Spot? This continues to look like a very benevolent environment for risk assets. Growth in the U.S. remains decent, with Q1 GDP growth beating expectations at 3.2% QoQ annualized (albeit somewhat…