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Capital Daily

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
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Capital Daily

China’s equities and the renminbi may remain under pressure

We expect external and domestic headwinds to keep Chinese equities and the renminbi under pressure over the rest of 2022.

Capital Daily

Harder to see fears of a US slowdown in markets

We think that renewed optimism about the US economy – which seems to have gained more traction in financial markets following signs that inflation is easing – is overdone. Our view that the US economy is set for a weak patch is one reason why we expect many “risky” assets to reverse their recent gains.

Capital Daily

Rising real yields may end US equity outperformance

US equities have rallied over recent weeks and outperformed stocks elsewhere, a trend which kicked up a gear after the US CPI data yesterday. But we expect equities in general to fall over the rest of 2022 and suspect that stocks in the US may slightly underperform those in the rest of the world as US real yields rise.

11 August 2022

Capital Daily

Falling (headline) inflation doesn’t preclude renewed rises in yields

Despite dropping on the signs of a softening in some inflationary pressures, we suspect the yield of 10-year US Treasuries might climb again this year.

10 August 2022

Capital Daily

Surging unit labour costs are a danger to the US stock market

Today’s news that unit labour costs in the US nonfarm business sector grew at a near double-digit annual pace in Q2 2022, as soaring wages interacted with negative productivity growth, hasn’t ruffled the stock market much. That may be because of question marks about its accuracy in light of wedges between data on expenditure, income and employment, and because investors are fixated instead on what tomorrow’s timelier consumer price report for July will reveal about inflation. Nonetheless, when unit labour costs last grew so rapidly, in the 1970s, it was a bad time for equities partly because they squeezed profits. That is a risk today.

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