Economy
Q2 US GDP beat expectations at 3.0% annualized, but the underlying data confirm that growth momentum is fading, reinforcing our defensive stance. Consumption rebounded, but disappointed at 1.4%. The quarter was heavily distorted by trade dynamics: firms…
The July Conference Board Consumer Confidence report showed improved expectations but weaker current conditions, reinforcing our defensive stance and preference for downside protection. The headline index rose to 97.2 from a revised 95.2 on the back of better…
The June JOLTS report showed further weakening in US labor market momentum, reinforcing our overweight duration stance and preference for steepeners. Job openings fell more than expected to 7.4m from a downwardly revised 7.7m, while quits declined to 3.1m and…
We will only move to a fully defensive stance if the “whites of the recession’s eyes” appear. So far, they have not. We will be increasingly looking to our MacroQuant model for guidance on when the next turning point in markets may come.
Cresting price pressures and weak global growth reinforce our long duration stance, with labor market slack limiting inflation upside across most major economies. Our price pressure indexes show moderate input inflation outside the US and stable global…
The July Dallas Fed survey beat expectations, pointing to a rebound in current activity, but the outlook remains subdued, supporting our modestly defensive asset allocation. The headline index rose to 0.9 from -12.7 in June, with production jumping 20 points…
Although we think the economy is weaker than investors realize, it has remained resilient and we will not fight the tape forever. If clear signs of a recession do not emerge over the next six weeks, we will drop our defensive recommendations.
June core capital goods orders missed, confirming subdued capex momentum and reinforcing our defensive stance and long duration bias. Orders fell 0.7% m/m, below expectations, while shipments rose 0.4%. Headline durable goods dropped 9.3%, reversing…
Tokyo CPI data confirms persistent inflation pressures in Japan, keeping the BoJ on a hawkish footing and reinforcing our underweight in JGBs and bullish stance on the yen. July Tokyo CPI came in broadly in line, falling to 2.9% y/y from 3.1%, with core and…
Investors should anticipate above average Treasury returns during the next 12 months, and curve steepeners will continue to profit.