Developed Countries
Credit spreads continue to price in a Goldilocks scenario. US investment grade and high-yield OAS have tightened 41 and 137 bps from their October peaks, resulting in handsome outperformance by both sectors relative to duration-equivalent Treasuries. …
According to BCA Research’s Commodity & Energy Strategy service, among the commodity groups, industrial metals provide the most reliable leading signal that the US economy is heading toward recession. Industrial metals’ greater exposure to the very…
The stock market will suffer a setback from the weakening labor market and a rebound in US and global policy uncertainty.
US headline CPI inflation decelerated to a softer-than-expected 0.3% m/m (3.4% y/y) in April, from 0.4% m/m (3.5% y/y). Core CPI eased from 0.4% m/m (3.5% y/y) to 0.3% m/m (3.4% y/y). Declines in new (-0.4% m/m) and used vehicles (-1.4% m/m) prices largely…
US retail sales remained unchanged in April, a downside surprise from expectations of 0.4% m/m growth. Notably, the retail sales control group (an input to GDP) declined by 0.3% m/m despite expectations of mild growth and all of the March figures were revised…
The 3-month moving average of the unemployment rate has been a reliable US recession indicator. Indeed, there has never been a case in the post-war era when it has increased by more than a third of a percentage point from its cycle low without a recession…
The CBOE VVIX index (expected volatility of the VIX) dropped to a nine-year low of 73.26. A low VVIX index suggests subdued demand for VIX call options which are typically used to bet against significant market declines. Meanwhile, BCA’s composite sentiment…
Our updated views on Treasury yields and Fed policy following this morning’s CPI report.
The US stock market’s record 50 percent valuation premium versus the non-US stock market is pricing generative AI to do through the next decade what the Web 2.0 network effect did through the last decade. But this is a huge ask, as it will be very difficult for the Web 2.0 superstar companies to become generative AI superstar companies, assuming there are indeed any lasting generative AI superstar companies. We go through the main long-term investment implications.
Despite historically high interest rates and the fact that variable-rate mortgage issuances dominate the mortgage market landscape, Australian home prices continue to climb at a close to double-digit annual rate. The Core Logic House Price index is now…