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Fixed Income

Is China In A Liquidity Trap?

Symptoms of a liquidity trap for Chinese households are appearing. Our proprietary indicators for the marginal propensity to spend among households and enterprises continue falling. There has been a paradigm shift in Beijing’s approach to policy stimulus. Authorities will be slow to introduce large stimulus. Hence, China-related financial markets are set to fall further.

Emerging Markets Strategy, China Investment Strategy by Arthur Budaghyan
Monthly Portfolio Update: Where Could We Be Wrong?

Risk assets would perform well over 12 months only if inflation falls to 2% without triggering a recession. That would be unprecedented. We recommend investors stay defensive.

Global Asset Allocation by Garry Evans
US Treasurys: An Attractive Long-Duration Entry Point
Over the past month, market participants have shifted their expectations for the path of the Fed funds rate. At the start of May, expectations were for the Fed to cut rates below current levels to just above 4.5% by the end of the year. Participants now…
Daily Insights
Why Oil Is Headed To $55 (The Reprise)

Expectations for oil demand growth through 2023-24 are way too optimistic. Until these expectations fall to -0.5-1 percent, the oil price has further downside. Plus: collapsed complexity confirms that AI is in a mania, while basic materials stocks and ZAR/EUR are rebound candidates.

Counterpoint by Dhaval Joshi
Interest Rate Differentials Favor USD/CNY
The Chinese currency has underperformed most of its emerging market peers so far this year, depreciating by 2.5% vis-à-vis the US dollar. RMB weakness is consistent with the signal from other Chinese risk assets including onshore stocks which have lost 1.3%…
Daily Insights
Rangebound Then Down
According to BCA Research’s US Bond Strategy service Treasury yields will remain rangebound until the unemployment rate starts to rise. However, yields are now near the top-end of that trading range, making this a good entry point to initiate long duration…
Daily Insights
Chinese Industrial Profits Continue To Shrink
Profits of Chinese industrial firms dropped by 20.6% y/y in the first four months of 2023, extending the contraction that began in the second half of last year. Notably, the weakness remains particularly pronounced across the manufacturing sector, which…
Daily Insights
Macron’s Final Act

Now that the French pension reforms have been passed, President Macron’s focus will be on the international stage. Where are the risks and opportunities for French assets created by this pivot?

European Investment Strategy, Geopolitical Strategy by Matt Gertken, Jeremie Peloso
The RBNZ Is Done

The Reserve Bank of New Zealand hiked rates this week to 5.5%. There are many reasons to expect that to be the last rate hike for this cycle – a development that is positive for New Zealand bonds but bearish for the New Zealand dollar.

Foreign Exchange Strategy
The RBNZ Is Done

The Reserve Bank of New Zealand hiked rates this week to 5.5%. There are many reasons to expect that to be the last rate hike for this cycle – a development that is positive for New Zealand bonds but bearish for the New Zealand dollar.

Global Fixed Income Strategy, Foreign Exchange Strategy

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