Research Briefing | Jun 28, 2021

Global | Holding on to our core convictions

Despite a flattening of the yield curve and some position squaring of the socalled reflation trade, we believe our key asset allocation themes are still broadly intact after the Fed’s hawkish tilt last week.

In particular, we see renewed curve steepening from here, but focused mainly on the longer end of the curve, and moderate US Dollar weakness

Developments, however, point to a less aggressive view on the end point for the US 10 year Treasury yield, amid a surge of buying from the foreign official sector, as well as the gravitational pull from other core government bond yields.

This should be enough to maintain the reflation trade within equities. Although positioning towards short duration sectors appears stretched and therefore vulnerable to a further near-term unwind, fundamentals remain supportive of medium-term outperformance.

Back to Resource Hub

Related Services

Post

Pre-emptive debt restructuring: a viable scenario for Africa?

The question of debt restructuring is becoming a more pressing one: in recent weeks, a number of African sovereigns have openly or discreetly mulled public debt reorganisation, called for debt relief, or suffered credit rating downgrades owing to rising default odds.

Find Out More

Post

Big shifts are underway in Russia-China trade

Data for Q3 on the volume of China's imports of crude from Russia show a drop against the June level. Rather than an indication that China's demand has peaked, this may be a sign that China is preparing for the Russian oil price cap recently agreed by G7 by shifting some of its purchases to the grey market.

Find Out More