Economy
As expected, the UK economy bounced back in August with GDP expanding by 0.2% m/m following a 0.6% m/m decline in July. Yet to the extent that this improvement largely reflects a rebound after strikes weighed down on activity in the prior month, the growth…
The last few weeks saw a repricing of nominal yields to levels not breached since before the Great Financial Crisis. Breaking down the US 10-year Treasury yield into real and inflation expectations components reveals the selloff was mostly driven by the…
According to BCA Research’s Counterpoint service, the sharp sell-off in long duration bonds (ticker TLT) has reached the collapsed 130-day complexity that has preceded several turning-points in the last few years. This suggests a two-thirds probability of a…
US monetary policy is restrictive, as evidenced by a falling jobs-workers gap. The reason that unemployment has not risen is because labor demand still exceeds supply. That will change in the second half of 2024 when the US economy succumbs to recession. Investors should increasingly favor bonds over stocks.
Comments on recent Fedspeak, bond market moves and this morning’s CPI report.
Domestic auto sales in China will likely have anemic growth over the next three years. Yet, Chinese automakers are set to gain a larger share of the global market. Go long Chinese automakers / short global ones.
The US PPI report came in hotter-than-anticipated in September. Although the headline index decelerated from 0.7% m/m to 0.5% m/m, it remains above expectations of a more pronounced moderation to 0.3% m/m. In particular, a 3.3% m/m increase in energy prices…
The minutes of the September FOMC meeting confirmed that the Fed intends to maintain restrictive monetary policy for longer. Although inflation has been moderating, participants continue to view it as unacceptably high and emphasized that they remain…
Taiwanese exports unexpectedly grew for the first time in just over a year in September – sending a positive signal about the global manufacturing cycle. The 3.4% y/y increase surprised anticipations of a moderation in the rate of decline from -7.3% y/y to…
The Q3 earnings season will shift into high gear this Friday as banks report their financial results for the quarter. Among the trends that we’ll be watching for is insight on the outlook for profit margins. As our US Investment strategists recently…