Economy
The S&P 500 has breached 6000 and may retest all-time highs, but we would not recommend chasing the rally. Risk assets have shrugged off recession fears, with stress indicators like the VIX, SKEW, and VVIX still subdued, signaling limited demand for…
Further labor market deterioration would trigger a shift to maximum underweight in equities. While soft indicators have markedly deteriorated, hard labor data remains relatively resilient, though it has clearly weakened. The labor market is still in…
The London Sino-US trade talks offered hope of de-escalation, but Chinese equities remain under pressure from deflationary headwinds and lack a clear macro catalyst to trend higher.
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US-China Trade De-Escalation Won’t Drive New Highs
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Mixed signals from the NAB Business Survey reinforce our underweight in Australian government bonds and long AUD exposure. In May, business confidence rebounded slightly, rising to 2 from -1, but current conditions dipped to 0 from 2. Profitability continued…
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US: Cold CPI Is No Green Light For Cuts in June
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Shifting Commodity Correlations
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While we anticipate higher inflation in June, it looks increasingly likely that the price impact from tariffs will be less aggressive and long-lasting than many feared.
Bond market volatility will spike again in the near term. The Fed is committed to an easing cycle yet the Trump administration’s signature fiscal policy action will stimulate the economy. Tariffs are supposed to keep the budget deficit contained but they are inflationary.
UK labor market deterioration reinforces our overweight on Gilts and dovish BoE policy trades. Payrolls fell by 109k in May, an acceleration from the 55k revised decline for April (originally reported as -33k), and job vacancies continued to slide. Slower…