Economy

1 in 17 older Americans workers have gone missing either through ‘excess retirements’ or ‘excess mortality’. The consequent dislocation of the labour market means that the Fed’s work is not yet done. We go through some investment implications. Plus: the China and Japan rallies are exhausted.

The issue of "industrial overcapacity" in China may be a misconception. Overcapacity in the old-economy sectors has largely diminished, while China's dominance in the global green-energy market reflects its technological advancements and innovations.

Europe did not witness a major policy reversal. Inflationary pressures are coming down, enabling the ECB to cut rates and European states to maintain soft budgets. Geopolitical challenges ensure that European parties continue to cooperate on national defense, economic security, and energy security.

We close our overweights to Energy and Aerospace & Defense. The macroeconomic backdrop is deteriorating for Energy. As for A&D, the good news is already priced in.

The ECB is now firmly in easing mode, even if it refuses to pre-commit to a specific rate path. What does this data dependency mean for the euro and European yields?