Developed Countries
Our US bond team’s thoughts on this afternoon’s FOMC meeting and yesterday’s CPI release.
Our 2024 outlook can be encapsulated into just 39 words and three key views. Key view 1: The end of China’s housing boom means the end of the world’s main growth engine. Key view 2: If the Fed and ECB don’t kill the economy, they won’t kill inflation. Key view 3: The AI gold rush will struggle to find any gold. We go through the investment implications for the year ahead.
The November US CPI release came in broadly in line with consensus expectations on Tuesday. On an annual basis, headline CPI inflation eased from 3.2% y/y to 3.1% y/y while core inflation was unchanged at 4.0% y/y. On a monthly basis, both headline and core…
Australian materials stocks have been outperforming the country’s broad index since mid-August, undoing the sector’s relative losses of the prior months, and bringing the year-to-date gain to 7.7% in absolute terms – above the broad index’s 3.5% increase.…
The continued improvement in German investor morale captured by the ZEW survey corroborates other indicators pointing to near-term support for Eurozone stocks. Economic sentiment jumped three points to a 9-month high of 12.8 in December, surprising…
US small-cap stocks have benefitted from the recent improvement in risk sentiment. The S&P 600 is up 10% over the past month – exceeding the S&P 500’s gains by 5.4 percentage points after having underperformed throughout most of the past year. …
According to BCA Research’s US Bond Strategy service, Treasury curve steepeners will pay off handsomely once the next recession hits. However, curve flatteners (aka barbelled Treasury portfolios) offer better value for the near term. A barbelled Treasury…
Results of the New York Fed’s November Survey of Consumer Expectations corroborate the signal from the University of Michigan’s preliminary results that inflation expectations are receding. The 0.2 percentage point drop in one-year ahead inflation…
Multiple major DM central banks are scheduled to decide on monetary policy this week. The US Fed will meet on Wednesday, followed by the ECB, BoE, and Norges Bank on Thursday. It comes after the BoC and RBA both opted to keep rates unchanged last week. …
The gold/silver ratio (GSR) confirmed the improvement in global risk sentiment in November. It declined on the back of a 9.2% rally in silver, which outpaced the 1.9% rise in gold. Since then, the GSR has soared amid a more pronounced drop in the price of…