Policy
Markets are rallying on Fed rate cuts and China stimulus but there will also be October surprises ahead of the US election, which Trump could still win. Russia’s conflict with the West is escalating and the Middle East is destabilizing further. Investors should favor US bonds but they should add some risk in emerging markets in response to China’s policy turn.
This week has not been short of developments on Chinese policy. After unleashing a monetary policy blitz, the authorities held an unscheduled Politburo meeting resulting in a pledge to take actions towards stabilizing the housing market and to support fiscal…
In a widely expected move, the Swiss National Bank (SNB) cut its policy rate for a third consecutive meeting on Thursday, from 1.25% to 1.00%. The move marked President Thomas Jordan’s final policy decision and his incoming successor Martin Schlegel…
One commodity that has not reacted to the bullish demand-side news from the Politburo (see The Numbers) is crude oil. Brent shed over 2% on Thursday, in sharp contrast to Copper’s gains. Oil markets seem to be reacting to a bearish supply-side development…
According to BCA Research’s Commodity and Energy strategy service, even though US crude output will continue rising, a meaningful growth acceleration is unlikely. US producers adjust their output in response to market conditions. In the past, a selloff in…
The conventional 30-year mortgage rate eased further to 6.2% from above 7% back in the spring, spurring a 20.3% surge in refinancing activity last week. Mortgage applications rose 11.0%, marking a fifth consecutive week of increase and the Conference Board…
A US recession remains our base case over a cyclical investment horizon. We expect the ongoing labor market deterioration to eventually tip the economy into a recession. We therefore continue to expect the disinflationary forces to dominate the US economy…
US investment grade and high yield spreads have tightened 22 and 75 bps since their August highs. Risk assets have cheered the outsized Fed rate cut as the narrative in markets aligns with the Fed’s conviction it can deliver a soft landing. Our US Bond…
BCA Research’s Geopolitical Strategy service introduced a Global Political Capital Index. Investors should favor countries with newly elected government, small government size, and ample room to cut policy rate. Ideally, they should also be in a stable…
This insight parses through the RBA’s latest policy decision, and makes recommendations on whether to expect any rate cuts in 2024, and beyond.