Developed Countries
The US labor market continues to show signs of resilience. According to the January JOLTS report, job openings decreased by 3.6% m/m to 10.8 million. This reading came in higher than economists’ expectations of 10.6 million. The number of hires increased…
The BoC held its overnight rate at 4.5%, as telegraphed by the Governing Council at its January policy meeting. The BoC is widely expected to be among the first major DM central banks to end its tightening cycle, alongside the Reserve Bank of Australia and…
The strength in the euro versus the yen since May 2020 can be divided into two phases. During the first phase, from May 2020 to June 2021, the ebbing of the worst of the pandemic and the re-opening of the global economy boosted the pro-cyclical euro relative…
The combination of collapsing energy inflation and cooling wage inflation means that euro area core inflation will slump later this year. We discuss the consequences.
As expected, the Reserve Bank of Australia raised its Cash Rate by 25 basis points to 3.60%, delivering a 10th consecutive rate hike. However, the central bank’s dovish signal about the monetary policy outlook led to a decline in Aussie government bond yields…
The US Treasury curve bear flattened sharply in response to Fed Chair Jay Powell’s testimony before the Senate banking committee on Tuesday. The 2-year yield’s 12 basis point jump and upward revision to futures markets’ expectations of the peak fed funds rate…
Lower earnings expectations: Analyst earnings growth expectations have moderated since the summer, downshifting from a sugar-high 10% in July to the most recent target of 2% for the next twelve months. This is a positive for equities as it indicates…
BCA Research’s European Investment Strategy & Foreign Exchange Strategy services conclude that for the next one-to-three months, European data could continue to underwhelm US variables, which will weigh on the euro. The euro has been giving back recent…
The equity market is back to the 2019 level on an inflation-adjusted basis. However, it is still not cheap as it is not pricing in the possibility of a prolonged and deep earnings recession or a higher interest rates regime. Many areas of the market that appear cheap, are cheap for a reason. The only industries that are cheap because they are growing into their valuations are Energy and Airlines. We are upgrading Airlines to equal weight.
The March Sentix Economic Index sent a cautionary signal about investor morale. The overall index for the Eurozone declined from -8.0 to -11.1 – marking the first monthly decrease since the index bottomed at -38.3 in October and missing expectations of a…