Clare MacCarthy
Senior Editor, Saxo Bank Group
US markets are closed to mark Independence Day but in the background, the drumbeat of global trade wars continues to rumble, undermining the yuan and Chinese equities, sparking fears of contagion across fixed income and dragging a major tech company onto the battlefield.
The Peoples Bank of China's intervention yesterday in support of its currency did slow down the yuan's decline but the market remains unnerved by the currency's prospects. "The signal is rather clear that the PBoC doesn't want to see a devaluation just yet," notes John J Hardy, Saxo's Head of FX Strategy.
On the trade war front we have fresh news out of the EU that the bloc is trying to put together a coalition countries to counter president's Trump's threat of tariffs on motorcar imports to the US, and this, Hardy says, illustrates the vulnerability of the EU to Trump's trade crusade.
In equities, "we're still in a risk-off scenario even though Chinese equities are 1% lower" says Peter Garnry, Saxo's Head of Equity Strategy.
To hear more about what's moving in global markets today, please click on the above link and listen in to our Saxo experts' morning call.
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach
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