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Which currency do you want to hold – gold, crypto or fiat?

Posted on June 21st, 2019

It appears central banks have pivoted towards delivering more policy easing to bolster inflation expectations that have plumbed new lows this year.  The Fed has the greatest scope to ease policy, and the prospect of deep rate cuts has undermined the USD.  However, the Fed is struggling to gain the initiative and appears to be […]

The global recovery narrative crumbles

Posted on May 24th, 2019

The US equity market was running with an optimistic assessment that there is a Trump and Fed put, that a trade deal and Chinese policy stimulus would generate a recovery in the global economy and the US economy was largely immune to a slowdown in activity abroad. However, the tariffs have been increased, trade talks […]

High stakes Huawei gamble a weight on US and global equities

Posted on May 21st, 2019

The Huawei Entity Listing appears to be a high stakes gamble by the US administration to counter the rise in Chinese economic power in an industry that is critical to the global economy.  It is evidence that the broader economic and trade dispute will be hard to resolve, and makes it harder for China and […]

Trump presses his advantage against China; CNY drags down Asian currencies

Posted on May 14th, 2019

CNY falls sharply illustrating that China bears most of the fallout from the trade war.  The US economy also suffers, mostly from the risk that China boycotts US brands, but Trump may have a significant advantage.  Bilateral US tariff policy may be an effective policy to counter China’s policy of subsidizing and regulatory support of […]

Australian labour and wages indicators point lower ahead of key data next week

Posted on May 10th, 2019

The RBA essentially made a case to cut rates on Tuesday this week.  However, it held back, perhaps influenced by the timing of the election (18 May), to give the labour market data a chance to show that it is on a tightening trend.  This places much importance on the labour market data for April […]

RBA and RBNZ in the hot seat, Trump’s tirade threatens global risk appetite

Posted on May 7th, 2019

US and global asset markets appear to have built in a completed US-China trade deal relatively soon.  Equities have rebounded this year, despite sluggish global trade and industrial activity since last year. If a trade deal proves elusive, or indeed if the US raises tariffs, it can significantly undermine global asset markets. Trump’s tweets may […]

An RBA rate cut next week is the smart move; Fed firmly on hold

Posted on May 2nd, 2019

The RBA should cut rates next week to signal that its inflation target still matters.  Slumping inflation expectations over the last six months, and shifting global central bank focus to address low inflation outcomes, make it more imperative for the RBA to act.  Its patience with low inflation was appropriate when the housing market and […]

A reprieve for the EUR, but not a game changer

Posted on May 1st, 2019

Stronger Eurozone Q1 GDP and German CPI suggest that the ECB need not rush to ease policy further.  However, these data points appear to be largely payback for weak previous outcomes.  More current business surveys suggest that there is no clear path back to above-trend growth.  The EUR downtrend may persist if the market continues […]

Bond yields rope-a-dope and fight back

Posted on April 15th, 2019

The market absorbed more negative news on the global economy last week, including the IMF forecast downgrade, pessimistic ECB, trade threats by the US towards Mexico and Europe. However, by end week, bond yields, risk assets and the EUR were stronger, suggesting the market has built-in a quite negative scenario and may respond more to […]

Watch out for dovish noises from the Fed and RBA

Posted on April 10th, 2019

We see scope for dovish noises from the FOMC minutes and Fed speakers.  The Fed appears to be in the process of shifting towards adopting an average inflation target, which should make them more sanguine if inflation rises above the 2% target and more responsive to signs that economic growth may be slowing.  We expect […]