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Capital Daily

Capital Daily

We doubt short-term yield gaps will weigh on the US dollar

Even if short-term nominal yield gaps continue to shift against the US dollar, we don’t expect its rally to abate yet.

18 August 2022

Capital Daily

Pound likely to remain under pressure this year

We think the Bank of England will hike interest rates by less than money markets now discount, which in turn should keep the pound under pressure against the dollar.

17 August 2022

Capital Daily

Equity and commodity prices may go their own ways

We think equity and commodity prices will generally head in opposite directions over this year and next.

16 August 2022

Our view

We expect further rises in global government bond yields and renewed falls in equity prices over the coming year. Government bond yields have typically peaked only shortly before the ends of central bank tightening cycles and we expect most major central banks to raise rates significantly over the remainder of this year. We think the increase in government bond yields, as well as a slowdown in global economic growth, will keep risky assets, such as equities and corporate bonds, under pressure. We also expect the worsening risk environment as well as aggressive tightening by the Fed to result in further US dollar appreciation.