US | Positioning for rate normalisation
We see the strong pull back in long-term US yields since the peak of the reflation trade this year as an opportunity to enter new positions that capitalise on future macro trends driven by mid-cycle dynamics.
The recent price action means we are now ready to tactically enter trades which will benefit from sustained global growth as we go into 2022.
We telegraphed that the recent June Fed hawkish tilt would lead to a prospectively lower inflation risk premium, but we now believe this has largely played out in fixed income markets
We think the market has downwardly re-priced the Fed funds terminal rate too aggressively, and we see an uptick in the terminal rate from here.
BoK’s monetary policy to tighten even as hiking cycle ends
Even without rate hikes, central banks' monetary policies can effectively tighten if the nominal neutral rate falls below the policy rate. We expect this will be the case for the Bank of Korea this year, as the gap between the policy rate and the nominal neutral rate widens.Find Out More
China: Emerging green shoots in Spring, but not out of the woods
We now incorporate a faster recovery from the post-Covid exit wave and raise our 2023 full-year GDP growth forecast to 4.5% (from 4.2% previously).Find Out More