Financial Markets
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Messages From Commodity Curves
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The gold-to-oil price ratio seems tactically overextended, but global macro drivers suggest it will rise further. The gold bull run is still relatively young and not yet stretched compared to rallies from the past 50 years. Importantly, ongoing…
The outperformance of European small caps is coming to an end. Our Chart Of The Week comes from our European Investment Strategy team.The team identifies several headwinds for small caps in Europe in the near term. Small caps’ performance is primarily…
Uranium spot prices may have found a floor after falling to $64/lb from a $107/lb peak in February last year. This drawdown has been unexpected considering the strength of the underlying supply-demand fundamentals for uranium. The momentum remains…
Tariff front-running behavior makes the April hard economic data difficult to interpret, but we take the strong reading from Food Services spending as a signal that the US consumer has not yet buckled.
The rebound in Eurozone sentiment is encouraging but headwinds persist, justifying a defensive stance on European assets. The May ZEW expectations index jumped to 11.6 from -18.5 in the Eurozone, with Germany’s gauge also rising to beat estimates. However,…
Small business sentiment remains recessionary, supporting our defensive asset allocation stance. The NFIB Small Business Optimism Index fell less than expected to 95.8, reinforcing the cratering in soft data witnessed since the election with policy…
A weakening economy will apply downward pressure to Treasury yields, but the Trump term premium will keep long-dated yields higher than they would otherwise be. This makes Treasury curve steepeners the most attractive trade in US fixed income.
It may take several months for the tariff shock and policy uncertainty to filter through the real economy, but survey-based data are already sending a warning. Equities have priced in a lot of good news, and investors are too sanguine about the risk of a US recession.
Cross-asset signals remain distorted by policy developments, but we expect the US dollar to rebound tactically. More than observable fundamentals, policy headlines have been driving cross-asset movements. Traditional leading indicators have had limited market…