Highlights There is some evidence that the euro could gravitate to 1.50 over the next few years. The key assumption is that the equilibrium rate of interest will rise in the euro area relative to that in the US. Our bias is that fair…

Highlights COVID-19: Markets are trading off the longer-term positive news on COVID-19 vaccines, rather than the shorter-term negative news of surging numbers of new virus cases in Europe and North America. This will continue as long…

Highlights The vaccine promises an eventual return to “normal” life – just as Americans voted to “return to normalcy.” Markets are cheering and hinting at an eventual rotation into value stocks. The…

Highlights Biden’s chances of winning the US election are rising, but it is still unsettled and could bring negative surprises to financial markets. The fiscal cliff will not subside immediately as the Senate Republicans have…

Highlights The breakout in the DXY indicates the investment universe could become precarious. The euro could fall to 1.04 on such an outcome. The yen and Swiss franc should outperform in this environment, barring recent weakness in…

Highlights The world remains mired in a manufacturing recession. This has historically not been bullish for pro-cyclical currencies. The velocity of money in the euro area will need to rise vis-à-vis the U.S. to confirm a…

Highlights 10-year real Spanish and Portuguese bond yields have already fallen below the neutral rate of interest for the entire euro zone. This suggests monetary conditions could now be favorable for all euro zone countries. Should…