Steeper and Cheaper

While further gains will be harder from here, indicators continue to point to a supportive backdrop for yields and the yield curve, with the latter historically tending to steepen through US elections In our October monthly report (The Case for Banks – October...

Elections Come and Go

The US presidential election on Tuesday is currently the number one event risk for US equities.  But investors should focus on two more important underlying themes: positioning and reflation. Markets haven’t whole-heartedly embraced the reflation trade as money...

Don’t Fear the Rise in Yields

The last few weeks have seen US yields breakout to the topside of the tight range they have been trading in. The market narrative is that yields have been boosted by more clarity on the US election – a Democrat win with a mooted $3.5 trillion stimulus package in...

Too Big to Care

The antitrust report published last week by a House of Representatives subcommittee has set the wheels in motion to tackle anti-competitive behaviours in Big Tech. We think it has little immediate effect for investors today, but the risks are mounting....

What They Will Do vs What They Should Do

Governments are becoming very concerned about the resurgence in virus cases seen since summer. In context, the rise in cases should not be too alarming. More testing means more cases will be found, and the relatively high false positive rate for the most common tests...

The Big Imbalance – US-China

The US and China recoveries are tied at the hip. Both countries responded to the pandemic in ways that suited them, with the consequence the global trade imbalance is now essentially a bilateral one between the US and China.  The plunge in global trade has reduced...

Fed No Longer the “Only Game in Town” for Stocks

US equities are beginning to behave more normally. The average pairwise correlation across S&P 500 stocks has plunged (top-left chart), which tells us that stocks are starting to move independently from one another and are no longer driven to the same extent by...

Lockdown Threat = A Two-Speed Economy and Market

Inequalities that existed before this crisis have been amplified by it. One place where this is prominent is in markets. Interest-rate sensitive sectors are seeing a marked outperformance due to their heightened sensitivity to liquidity. Technology has also benefited...