Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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Is the 'Goldilocks trade' returning?
Michael McKenna
Head of Editorial Content, Saxo Bank
The combination of stable Federal Reserve expectations, sliding US bond yields, and resurgent risk appetite is providing fundamental support for the 'Goldilocks trade' disrupted by the early February volatility shock, says Saxo head of FX strategy John J Hardy.
"We see the dollar rally fading on the return of risk sentiment, and Friday's Fed report was received by markets as dovish due to an apparent lack of concern regarding labour shortages," adds Saxo's FX head.
The broadly bullish environment saw Asian shares follow Friday's markets higher overnight, reports Saxo bank head of equity strategy Peter Garnry, with the Nikkei 225 rising by 1.4% and the Hang Seng index up by 1%.
"We also saw a rally in Chinese shares with the automotive sector leading the pack, but we remain structurally negative automakers given the late-stage economic cycle," says Garnry.
One continued outperformer into today's European bell is the Japanese yen, which is supported by flows, the fall in core bond yields, as well as what Hardy terms a general reassessment of the currency's value.
"We could even see USDJPY at 100 [if present trends continue]," Hardy says.
One of this week's major events in light of the above is newly minted Fed chair Jerome Powell's Congressional address, with Saxo fixed income specialist Althea Spinozzi noting that a hawkish outing could have interesting knock-on effects in US yields.
"Last week we saw the 10-year yield rise to 2.95% Wednesday before closing Friday at 2.87%," says Spinozzi, although Garnry cautions that markets may have reassessed the risk posed to equities by rising yields as kicking in at 3.5% rather than the much-discussed 3% level.
Finally, Spinozzi reports that the March 4 Italian election could easily wind up producing an inconclusive result given fractious coalitions and general volatility; if this proves the case, says Spinozzi, Italian yields could see a 20-30 basis point jump.
Today sees European Central Bank president Mario Draghi speaking at 14:00 GMT and new Fed board member Quarles out at 20:15 GMT.
Quarterly Outlook
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Quarterly Outlook
Q3 Macro Outlook: Less chaos, and hopefully a bit more clarity
John J. Hardy
Global Head of Macro Strategy
After the chaos of Q2, the quarter ahead should get a bit more clarity on how Trump 2.0 is impacting... -
Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ... -
Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
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Quarterly Outlook
Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever
Jacob Falkencrone
Global Head of Investment Strategy
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Quarterly Outlook
Commodity Outlook: Commodities rally despite global uncertainty
Ole Hansen
Head of Commodity Strategy
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Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist
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Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
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Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy