Mounting risks for Eurozone and China

Posted on October 10th, 2018

Under-performing Eurozone corporate assets point to downside risk for the EUR, as does higher US real yields and higher US hedging costs.  German industrial data has deteriorated, and wage pressure in the US is rising.  Unless the Italian budget standoff is resolved, EUR should develop a clearer downtrend.  Chinese equities remain under pressure, and the […]

Old Skool moves in US yields and dollar

Posted on October 4th, 2018

US yields shot higher Wednesday after 10-year yields rose above previous highs for the year.  While rising US yields haven’t helped the USD all that much in the last year or two, the USD experienced a broad-based rise in line with the rise in US yields today.  The rise in yields is too sharp, and […]

Clouds clear for CAD, but shroud EUR and AUD

Posted on October 2nd, 2018

CAD has shot up in recent sessions as the NAFTA cloud has been lifted.  These may not be great levels to buy CAD, but it could continue to strengthen as inflation pressure builds and oil prices rise to new highs.  EUR has dropped on Italian budget risks.  Eurozone core inflation slipped in September and economic […]

New Zealand GDP post-mortem – NZD still vulnerable

Posted on September 21st, 2018

Q2 was a good quarter after a lacklustre three quarters.  Government spending is starting to kick in and may help support the economy, but business activity and consumer confidence surveys suggest growth will sag through the rest of the year.  The RBNZ is likely to retain a neutral policy message in its statement next week, […]

Risks for AUD and NZD coming to the surface

Posted on September 19th, 2018

The USA fired off its biggest missile yet in its trade war with China and has rolled up more artillery.  There is little doubt that they are in for the long fight and this poses significant downside risks for Asian markets.  AUD has been a proxy for tariffs and rebounded on Tuesday, in-line with a […]

Wading through event risks – Trade, Brexit, Fed policy, US mid-terms

Posted on September 14th, 2018

Hopes that the US and China will avert an all-out trade war and one low inflation print in the USA have sparked a ray of hope for emerging-market assets.  Hopes that UK PM May can navigate a Brexit plan through a fractured UK parliament have lifted the GBP.  The US mid-term elections are a risk […]

The USA’s late-cycle fiscal adventure kicks-in

Posted on September 12th, 2018

US yields are kicking to new highs as the US late-cycle fiscal adventure, and America First (tariff and sanctions) policy tighten their grip on the economy and markets.  We expect this to push the USD to new highs in coming months, even if it points to longer-term risks for the US economy.  US Inflation pressure […]

Australian economy hitting its stride, but AUD is pricing a growth stumble

Posted on September 6th, 2018

The US wages data and trade policy announcements that may come before end week will keep global markets on edge.  There is scope for a corrective bounce in EM assets, but the prospect of further US rate rises and an escalation of the US-China trade war may hang over global markets for some time.  The […]

RBA may tweak guidance

Posted on September 3rd, 2018

Last week we wrote that an “RBA rate cut may soon be back on the table.”  The RBA releases its monthly interest rate decision statement on Tuesday this week.  No one is expecting much change in the statement.  We agree that the RBA  is more likely to leave its statement little changed this month.  However, […]

RBA rate cut may soon be back on the table

Posted on August 31st, 2018

In our view, downside risk for Australian interest rates and the AUD have increased significantly.  The persistent increase in bank funding costs that has led Westpac to raise mortgage rates is a further tightening of monetary conditions and comes at a precarious time for the housing market.  Australian political risk has increased as an election […]