FICC

In this Insight, we share our thoughts on yesterday’s FOMC meeting and the Fed’s likely next moves, with implications for US bond strategy.

Special Report

In this Special Report, we update our thinking on the Hong Kong SAR dollar peg, with implications for domestic asset markets.

The US DoD rolled out its first-ever industrial policy designed to reverse decades of atrophy in its military-industrial complex. This left the US with diminished access to CMM commodities and supply chains, which are now dominated by China, and an industrial ecosystem to support its war-fighting mission that risks become uncompetitive. We remain long the XME and COMT ETFs to retain exposure to CMM producers and refiners. At tonight’s close, we will get long the Invesco Aerospace & Defense ETF (PPA), anticipating increased defense spending.

We present the performance review of the Global Fixed Income Strategy Model Bond Portfolio for 2023. We also discuss the outlook for 2024 performance based on our Key Views for the year. The portfolio is positioned to benefit from a year where the global backdrop will be one of weak growth and further declines in inflation, leading central bank to begin cutting interest rates.

Special Report

Commodity volatility will continue its rising trend since 2014. The US is on the brink of a major election, the outcome of which could reduce its willingness to engage with the outside world. So, states seeking to carve out their own spheres of influence are incentivized to raise the economic costs to the US and discourage its influence in their regions. These states can do this by interfering in key trading routes in their regions. As a result, geopolitical threats to maritime chokepoints are a structural as well as cyclical problem and will persist due to the revival of superpower competition.

Low inflation argues for the Fed to move relatively quickly toward rate cuts. Continued above-trend GDP growth poses a risk to this view, but leading indicators point to slower growth in the coming quarters.

We look at the implications for FX from the slew of central bank meetings this week.

In this Strategy Insight, we assess the monetary policy path for Australia and Canada in 2024 and we discuss how to profit from a growing divergence between the two economies.

An update to our outlooks for the Fed’s interest rate and balance sheet policies following this week’s remarks from Fed Governor Waller.

This report examines if investors should worry about a balance of payments crisis in the next 3-to-6 months.