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We doubt short-term yield gaps will weigh on the US dollar

Even if short-term nominal yield gaps continue to shift against the US dollar, we don’t expect its rally to abate yet.

18 August 2022

Pound likely to remain under pressure this year

We think the Bank of England will hike interest rates by less than money markets now discount, which in turn should keep the pound under pressure against the dollar.

17 August 2022

Weighing up the relative prospects for stock market sectors

We think the macroeconomic backdrop that we envisage is consistent with certain “defensive” sectors of the S&P 500 – utilities, healthcare and consumer staples – outperforming over the rest of this year.

17 August 2022
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Equity and commodity prices may go their own ways

We think equity and commodity prices will generally head in opposite directions over this year and next.

16 August 2022
Global
Commodities
Equities
Markets

China’s equities and the renminbi may remain under pressure

We expect external and domestic headwinds to keep Chinese equities and the renminbi under pressure over the rest of 2022.

15 August 2022
Asia-Pacific
China
Global
Bonds
Equities
Growth and Activity
Markets
Monetary Policy

Dollar falters on continued risk-on rally

The US dollar continued to struggle this week as equity markets extended their rebound and commodity prices also rallied: the currencies of commodity exporters and other economies most exposed to global growth generally fared well. Wednesday’s lower-than-expected US CPI data provided the latest catalyst: the S&P 500 rose around 2% following the CPI report, and the DXY index registered one of its worst days in recent years, falling by more than 1%. Nonetheless, further hawkish comments from FOMC members, weak credit data out of China and today’s strong US consumer confidence survey have provided some support for the greenback. Our sense remains that the dollar rally will resume before too long. It will take a lot more good news on inflation before the Fed changes tack. The minutes from the last FOMC meeting, released next week, and the Jackson Hole conference the week after may well push back further against the notion that the Fed is “pivoting”.

12 August 2022
Global
North America
US
FX
Markets

Kenya’s elections up in the air, mixed FX bag across SSA

The fact that Kenya’s elections have, so far, proceeded peacefully have supported a rally in the country’s bond market. But with no official results available yet and reports pointing to a tight race, significant risks abound. Meanwhile, currencies of major African economies have fared quite differently over the past month. While the South African rand has rallied, the further falls in the Ghanaian cedi and Nigerian naira (on the parallel market) point to increasingly acute economic problems.

12 August 2022
Africa
Ghana
Kenya
Nigeria
South Africa
FX
Inflation
Markets
Politics and Institutions

Harder to see fears of a US slowdown in markets

We think that renewed optimism about the US economy – which seems to have gained more traction in financial markets following signs that inflation is easing – is overdone. Our view that the US economy is set for a weak patch is one reason why we expect many “risky” assets to reverse their recent gains.

12 August 2022
Global
Growth and Activity
Inflation
Markets
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