FICC
One macro framework for rates, FX, credit, and commodities, helping investors connect cross-market signals and position with clarity and conviction.
Falling core inflation in the US over the short run will boost real disposable household income, which will keep consumption – ~ 70% of US GDP – strong. Over the medium- to-longer term – 3 to 5 years out – inflation risks rise as fiscal dominance becomes the Fed’s modus operandi, and economic fragmentation becomes entrenched. War and the expansion of war remains an inflation risk. In this environment, gold remains our preferred hedge.
Treasury yields will sketch out a range between now and Q1 2024, with the upside determined by inflation and the downside determined by labor markets.
In this Insight, we discuss the outlook for monetary policy in New Zealand after this week’s RBNZ policy meeting, and introduce related fixed income and currency trade ideas.
In our simulations of fairly deep global recessions averaging -1.5% in 2024 global GDP growth, we expect OPEC 2.0 to reduce output enough to offset lost demand. Even so, we find oil prices drop ~ $22/bbl – from ~ $100/bbl in 1H24 to ~ $78/bbl in 2H24. We remain long the XOP and COMT ETFs to retain oil and commodity exposures.
This report looks at the prospects for the Swedish krona, following the pause by the Riksbank.
China’s push to dramatically expand its copper-refining capacity will be complemented by further vertical integration of mining assets. However, surplus refining capacity will push treatment and refining charges lower in the short run. The threat of EU tariffs on Chinese EV imports looms large, and could be costly to China’s expansion of its already-dominant supply-chain ecosystem for EVs and metals refining. We remain long the XME and COMT ETFs to retain exposure to metals miners and refiners.
In this report, we evaluate the risk to carry trades in the coming months.