VP Weekly Wrap - 24 July 2026

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Into the Breach Once More - EM/DM Leading Indicator Watch

(23 July)

• Global diffusions reveal muted but stable growth, and an inflation impulse that has peaked. Uncertainty surrounds the renewed flare-up in Iran,  but basic incentives should prevent both sides from overplaying their hands.
• DM: We buy the dip in SONIA futures (SFIZ7), hold our short CHFJPY and step away from our bullish AUD bias. We are also waiting to sell the rally on EURSEK.
• EM: We close our Brazil risk-parity exposure and stick with Indonesian equities that are rebounding after the flood of LPPL crash exhaustion signals in June. USDKRW is testing its 200-day moving average and could be a tactical long.

DM

• UK: Growth headwinds + mixed inflation outlook => Long SONIA Futures (SFIZ7)
• Japan: Japanese policymakers need to act, not just talk. JPY seasonality turns favorable.
• Australia: Growth peaking, reverse our bullish AUD bias and turn neutral
• Sweden: Continued strength in growth LEIs => biased to sell rallies in EURSEK

EM

• Brazil: BCB easing cycle on pause, de-risk into October elections
• S. Korea: Semi and hiking cycle remain consensus, USDKRW testing 200DMA
• India: Significant foreign capital outflows, but food inflation tail risks can’t be ignored
• Indonesia: Equity rebound starting to take hold after previous LPPL crash exhaustion

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Stock-bond correlation biased upwards => gold remains portfolio diversifier (20 July)

• Recent volatility in inflation leading economic indicators (LEIs) is poised to push up stock-bond correlations, continuing a macro environment where bonds are less effective as equity diversifiers.
• Gold's meme-like price collapse this year is an opportunity to add gold exposure for multi-asset portfolios. It echoes the mid-1970s drawdown, which occurred against an even more severe inflationary backdrop.

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