French President Macron has backtracked in the face of increasingly violent protests against his policies. While this may provide a temporary calm, we believe France will remain under pressure as protests continue and the macro backdrop worsens.
Continue reading “France to Underperform as Downgrade Risk Rises”
A portion of the US yield curve has inverted. While this is not the typical inversion that presages a recession, markets are nevertheless on heightened alert. This piece will discuss the predictive power of an inverted yield curve as well as why we are not yet concerned that one will materialize.
Continue reading “Some Thoughts on US Yield Curve Inversion”
Fed Chairman Powell roiled global markets yesterday in his speech before the New York Economic Club. Upon further consideration, markets may want to rethink the knee-jerk reaction. This piece explains why.
Continue reading “Some More Thoughts on the Fed’s Neutral Rate”
Bank of Korea meets Friday and may resume its tightening cycle. However, it’s a tough call and we see risks of a dovish surprise as the economy struggles with growing headwinds. Political risk remains high too as North-South relations are in a sort of limbo.
Continue reading “Bank of Korea Meets as Downside Risks Grow”
We think that the market is overreacting to two Fed speeches and underreacting to ongoing firmness in the US data. Yes, the US economy is slowing but nothing beyond what was within expectations. Growth, while slowing from the blistering 4.2% SAAR pace in Q2, is still robust.
Continue reading “Where Do We Stand With Regards to the Dollar Rally?”
EM FX caught a bid last week as markets took Fed comments to be on the dovish side. Given how firm the US data have been of late, we do not agree with the newly prevailing view that the Fed will be more cautious. However, we must respect the price action and so this dollar correction will likely extend until the market’s Fed view reverses again.