Developed Countries

In this report, we go around the globe and survey the near-term outlook for G10 currencies. Our longer-term view on the dollar has been clear, we are sellers. In this report, we review if a tactical sell is also warranted given incoming data and the message from our models.

Labor markets are softening in most developed economies, as is usually the case in the lead-up to recessions. Our base case is that the global recession will begin in the second half of 2024, but we will be monitoring our MacroQuant model on a daily basis for confirmation.

Results from Tuesday’s elections suggest that the Democrats are doing better than what their 2024 polling are showing. While the results are marginally positive for equities, investors should not overrate this off-year election, especially considering the slowing economy and the many foreign challenges facing the US.

Natural gas storage levels in the US and EU are sufficient to balance flowing supply and demand this winter, assuming normal weather. China continues to invest in domestic production, and to diversify supply sources to compensate for a lack of storage. Longer-term Qatari contracts are giving higher weight to natgas trading hub prices. We remain long the XOP ETF to retain exposure to fossil-fuel producers supplying DM and EM economies with natgas beyond the 2050 net-zero-emissions goals advanced by the IEA.