Developed Countries
The soft-landing narrative has gotten nowhere at BCA but appears to be making some headway with broker-dealers and investors. We are preparing to lean against it once it pushes equity prices a little higher.
In this report, we evaluate the risk to carry trades in the coming months.
Investors should not get their hopes up about the Biden-Xi summit. Wait to see if a new ruling party is elected in Taiwan before downgrading geopolitical risk in the Taiwan Strait. US-China strategic détente is possible but neither the geopolitics nor the macro backdrop warrant a risk-on position next year.
US and Chinese oil-demand strength will offset EU weakness next year. Incremental supply growth from non-OPEC 2.0 producers, coupled with a lower risk of the US enforcing its sanctions on Iranian oil exports, reduces our 2024 Brent price forecast by $6/bbl, and takes it to $112/bbl.