FX Update: USD pulls back from new lows. TRY tailspin.
The US dollar weakened to new cycle lows this morning, only to perk up suddenly in what could be a sign of a tactical setback for USD bears, though too early to draw conclusions. In Turkey, the USDTRY spot rate accelerated to the upside to a new all-time high and other EM currencies were under a bit of strain, a possible source of the USD support here.
Market Quick Take - August 7, 2020
Equity futures pulled back sharply late yesterday after aggressive new highs in the US trading session after US President Trump banned TikTok and WeChat for use by individuals or companies in the US, to go in effect in September. In Asia, mainland Chinese chairs suffered a weak session, led by WeChat owner Tencent, while risk aversion elsewhere was modest.
Growth investing and valuation dynamics under low interest rates
Low interest rates and expectations that they remain low for a long time is changing investors attitudes towards equity valuation. More technology companies with predictable free cash flows are being valued as bond proxies. Under these conditions technology stocks could go much higher as long as the US 10-year yield remains below 1.5%.
Macro Dragon: Does the Amazon belong to Brazil or the World?
Macro Dragon = Cross-Asset Daily Views that could cover anything from tactical positioning, to long-term thematic investments, think pieces, key events & inflection points in the markets, all with the objective of consistent wealth creation overtime.
FX Update: USD slips lower again. TRY focus for EM.
Yesterday saw record highs for gold and tech stocks and a record low for US treasury yields for 2-year and out to 10-year benchmarks, with a weaker US dollar clearly helping things along. In EM, the focus is squarely on the Turkish lira as USDTRY poked above the 7.00 level that Turkey has been trying to defend of late.