Asia

Investors should de-risk tactically in expectation of shocks and surprises ahead of the US election and an uncertain aftermath. Democratic victory with a gridlocked Congress is our base case but would bring minor tax hikes and nuclear brinksmanship with Russia. A Republican single-party sweep offers huge tax cuts but also a global trade war. Recession looms regardless.

Both the Chinese and US central banks will likely take policy actions in the coming weeks. What is the potential impact of a mortgage rate cut on China’s household consumption and the broader economy? Will the anticipated Fed easing cycle further lift the RMB exchange rate versus the US dollar?