Currencies
In this Q4 Strategy Outlook, we discuss where we stand on our recession call, the outlook for stocks and bonds in various scenarios, why investors are misunderstanding the impact of AI on corporate profits, whether the US dollar has entered a structural downtrend, our perspective on the yen, gold and other commodities, and much more.
The dollar’s early 2025 decline was a reflection of a global rush to hedge accumulated USD exposure, not a mass exodus from US assets. With most hedging now complete, currency moves should again follow fundamentals, setting the stage for a tactical USD rebound in the months ahead.
The CNY/USD has room to appreciate both cyclically and structurally, while nominal yields on China’s long-duration government bonds are set to fall. This combination supports Chinese equities.
From Treasurys to tokenization, stablecoins are quietly becoming one of the most disruptive forces in global finance, with the power to compress yields, deepen dollar penetration, and shift the balance within crypto markets. Explore BCA’s latest insights on their growing impact.
USD-denominated Emerging Market bonds have been outperforming US corporates for the past year. We don’t think the rally is exhausted yet.