Economy
Labor market cracks reinforce long duration and steepener positioning as growth risks mount. Job market data has looked strong on the surface, but the details of the June employment and JOLTS reports confirm a slowing trend within the “low hiring, low firing”…
Deteriorating macro momentum supports a defensive asset allocation stance as hard data deteriorates. Last week’s ISM Manufacturing and Services PMIs confirmed that growth is slowing and price pressures are easing from a high level. The ISM Manufacturing index…
Stronger-than-expected June inflation will likely keep the Riksbank on hold in August, despite soft underlying trends. Headline inflation accelerated more than expected to 0.5% m/m (0.8% y/y), while CPI ex-housing rose to 2.9% y/y and core inflation to 3.3%…
Our China strategists maintain a defensive stance on equities, favoring government bonds and high-dividend sectors as deflation persists. China’s deflationary pressures are supply-driven, with manufacturing capacity expanding faster than domestic…
The latest data on Asian exports and manufacturing suggest that the global trade outlook remains downbeat. Korean exports in USD terms grew in June by 4.3% y/y. The three-month moving average is 2.2%. Assuming Q2 export shipments were boosted by frontloading…
Canada’s stronger currency and tightening financial conditions point to further BoC easing and support long Canadian bond positions. The CAD has appreciated this year alongside the global push to diversify away from USD assets, which has weakened the US…
June’s employment report showed a tick down in the unemployment rate, an improvement that rules out a Fed rate cut later this month.
ISM Services data confirm slowing growth and cooling inflation, reinforcing a defensive allocation stance. The index rose slightly to 50.8 in June from 49.9 in May, with new orders rebounding into expansion at 51.3. However, the employment subcomponent…
Stronger-than-expected June payrolls rule out a July Fed cut, but the report does not derail the case for long duration and curve steepeners. Nonfarm payrolls printed at 147k, with the two prior months revised up by 16k, leaving the 3-month average at 150k.…
Acute geopolitical risks, like a massive oil shock, may be abating. But structural geopolitical risk remains high and could upset a blithe market. Cyclical economic risks are underrated as the US slows down and China continues to stumble. Investors should book some profits in anticipation of tariff implementation and a downturn in hard economic data.