Economy
Industrial metals have been rallying in recent weeks. The London Metals Exchange Metals Index (LMEX) – a weighted index that captures the price movement of primary aluminum, zinc, nickel, lead, copper, and tin – has increased by 6.3% since late-May. Notably,…
For the most part, the US equity rally has been rather narrow this year – concentrated among stocks that investors perceive will be the key winners of recent AI developments. In the first five months of the year, only three S&P 500 sectors were in the…
According to BCA Research’s US Bond Strategy service, when the Fed’s interest rate and balance sheet policies are sending opposite signals, listen to interest rates. There seems to be some worry among investors that the coming increase in Treasury cash…
We are strategically bullish on the outlook of the energy sector. Domestic and external political constraints asserted themselves, restraining the most negative impulse against this sector by the Biden administration. Go long energy versus cyclicals (ex-tech).
Taiwanese export orders continue to signal that global manufacturing conditions remain weak. Orders declined by -17.6% y/y in May – albeit not as bad as the -21.3% y/y drop anticipated. The product breakdown reveals that all major categories experienced…
Japanese equities have been outperforming their global peers in recent months. Their 8.5% rally so far in Q2 exceeds the MSCI’s All Country World Index’s 5.6% gain over this period. Japan has not experienced the same inflationary overshoot plaguing most…
Tuesday’s US housing starts and building permits update for May corroborates the upbeat signal on the housing market from the latest NAHB survey. Both starts and permits increased on a month-on-month basis and exceeded consensus estimates. The 1.63 million…
High levels of inflation distort cross-period comparisons of both earnings and sales and mask real earnings growth rates. Last year is a case in point: While in nominal terms, earnings (including Energy) have been contracting for only two quarters, in real…
According to BCA Research’s China Investment Strategy service, a sustainable recovery in Chinese property construction is unlikely. The deterioration in China’s property market indicators worsened in May. Home sales sank by 16% y/y and new home starts…
This week’s report examines three potential catalysts that could push Treasury yields meaningfully higher within the next few months. We also consider the rebuild of the Treasury’s cash holdings and its implications for the Fed’s balance sheet policy and financial markets.