Food Inflation Tailrisks

Food prices are correlated with EM inflation surprises. The current surge in soft grain prices should be monitored in case it spills over into general inflation expectations Food inflation can have outsized impacts on inflation expectations due to the higher frequency...

Market Senses Rising Inflation Risks

Inflation remains one of the few areas where there is not an overwhelming market consensus. We see rising inflation risks The market is running out of non-consensus narratives, now that we can see the vaccine being rolled out and the potential for a strong economic...

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...

Inflationary Build-up in EMs

As has been the case in developed markets, policymakers in emerging markets have been quick to deliver monetary stimulus in the face of an unprecedented global health pandemic. While necessary to avert a deeper drawdown in economic activity, the indiscriminate...

Structural Inflation Back Drop ==> Buy Dips in Gold

Inflation breakevens have been rising and real yields have been falling this year, boosting gold and silver prices. Gold and silver prices corrected this week and last week as the reflation narrative gained traction, with 10y yields rising to their highest  level...

Markets Vulnerable to Shock of Higher Food Prices

The sharp slide in agricultural commodity prices this year has squeezed long trades, with net non-commercial futures positioning in corn now close to neutral (bottom-left chart). Corn has suffered the most precipitous drop, with high planting rates driving futures...

Silver to Continue to Outperform Gold

Low real interest rates and geopolitical uncertainty have helped fuel gold to being the best performing currency this year, returning over 10% against the USD. While we think gold remains a good investment in the current environment, we re-iterate our idea from our...