Macro: It’s all about elections and keeping status quo
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
Head of FX Strategy
Summary: US inflation report this week resulted in markets re-assessing whether the three Fed rate cuts could still come this year. On the contrary, the European Central Bank indicated that it could cut rates in June. This widening Fed-ECB divergence could bring scope of outperformance of European equities and bonds over their US peers, while EURUSD could see a medium-term downtrend. Scope of correction in EURNOK and EURCHF also seen.
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