Today's edition of the Saxo Morning Call features Saxo Bank Head of FX Strategy John Hardy, Head of Equity Strategy Peter Garnry, and bonds specialist Althea Spinozzi discussing the (very) tentative TRY recovery, the next moves for the USD rally, and the overall state of contagion and risk sentiment.
Macro Monday Week 46: Powell & China Watch
This week we highlight the YTD spectacular returns, i.e DAX +25%, SPX +23% CSI +32%, alongside very low volatility, VIX c. 12 -50% YTD, with KVP view being, not buying protection over a +6-12m horizon is likely equivalent to imprudence. Monthly growth data out of China, as well as Powell testimony on the US economy will be center watch. Rate decisions out of NZ & MX also key. Biggest risk continues to be reversal in US-CH trade deal euphoria.
Macro Monday Week 45: Global Growth Is Still In Free Fall
The weeks focus will be post Fed and BoC digestion, as well as RBA and BoE on the horizon. ISM Services from the US will be key, as will final PMIs out of EZ. Also look out for Lagarde speaking with the ECB governor's crown - will she set the bell curve for monetary policy in the EZ block. Cuts meanwhile are to be expected out of Thailand and Malaysia.
EM FX Carry Trade Update October 31, 2019
Emerging market carry trades have enjoyed very strong support recently from complacent background conditions. But those conditions may prove less supportive if instead of celebrating Fed liquidity provision and easing we see deepening signs that the US is headed into a recession. As well aggressive rate cuts are wearing down the carry premium for many EM currencies as well.
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