Bond markets displaying fear, equities clinging to the notion of a Fed or Trump put


The US equity market slid into the close on Tuesday to sit on key supports.  The market is beginning to acknowledge that trade policy actions to date are significant impediments to US, China and global growth and earnings. The bond market has proven more responsive to risks to growth so far this year.  Bond yields have fallen to a low since 2017, the US yield curve remains inverted this year,  inflation expectations have fallen to new lows in Europe and Australia, and have fallen in recent weeks in the USA.  Real yields have fallen to new lows in Australia and the UK. Bond volatility has lifted relatively more than equity vol;  FX vol remains tepid.  The market is pricing in significant rate cuts by the US Fed.  Equity investors are clinging to the notion of a Fed or Trump put.

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Greg Gibbs,
Founder, Analyst and PM
Amplifying Global FX Capital Pty Ltd