Developed Countries
It takes time for wage inflation to die. So, if 2022 was the year that central banks’ monster tightening killed bond and stock market valuations, then 2023 will be the year that it finally reaches the economy and kills profits, jobs, and the wage inflation that has so far refused to die. This means that commodity prices have substantial further downside, while healthcare relative performance has substantial further upside.
Australia’s headline CPI inflation accelerated to 7.3% y/y in Q3 from 6.1% y/y, the highest level since 1990. Housing, transportation and food led the year-on-year increase. Trimmed mean CPI, a less volatile measure of core inflation, also firmed from 4.9%…
The Bank of Canada unexpectedly slowed the pace of its interest rate increases on Wednesday, delivering a 50bp hike against anticipations of another 75bp rise. The decision reflects an attempt to balance between stubbornly elevated inflation and…
Yesterday we highlighted that the macroeconomic environment could support a rally in Treasuries over the coming months if easing price pressures allow the Fed to set the stage for a policy pivot. Our Composite Technical Indicator is also suggesting that…
The S&P 500 Banks index is among the worst performing industry groups over the past 12 months, underperforming the broad index by 10.2%. Curiously, this poor performance occurred despite rising interest rates. According to our US Equity Strategists,…
The Conference Board’s Consumer Confidence Index fell from 107.8 to 102.5 in October, significantly below anticipations of a milder decrease to 105.9. In particular, the Present Situation Index sunk to 138.9 from 150.2 while the Expectations Index declined…
10-year US Treasury yields fell sharply on Tuesday after closing at a 14-year high of 4.25% on Monday. The question facing investors is how much further can bond yields rise? Our US Bond strategists recently analyzed past Fed tightening cycles and found…
The Ifo Business Climate Index for Germany was broadly unchanged at 84.3 in October, beating consensus expectations of a decrease to 83.5. The 0.4-point decline in the Current Assessment index was better than consensus estimates of a 1.6-point drop.…
According to BCA Research’s US Political Strategy service, if Republicans only take the House, US policy will be more dysfunctional than if they take the entire Congress. US opinion polls are breaking in favor of Republicans in the final lap of the midterm…
This week’s report takes a look at risk-adjusted return opportunities in US spread product.