In today’s briefing:
- 5 Things We Watch – Fed Overtightening, Curve Steepening, US CPI, BoJ & China
- Inflation Watch – Here’s Why EU Inflation Will Get Back to Target Faster than US Inflation
- The Re-Rating in Asian Frontier Markets Has Begun – July 2023 Update
- Curve Steepeners and the Boomer Trade
5 Things We Watch – Fed Overtightening, Curve Steepening, US CPI, BoJ & China
- Welcome back to our Wednesday series where we take you through the world of global macro and what to look out for going forward.
- With US CPI being released tomorrow – where we as always will cover the most important take-aways post-release – there is room for market movements as the disinflation narrative continues amidst the possibility of a positive surprise in headline CPI due to base effects.
- We’ll as always be short and concise and let you into our thinking regarding asset allocation and positioning ahead of the data/events mentioned.
Inflation Watch – Here’s Why EU Inflation Will Get Back to Target Faster than US Inflation
- Lately, our attention has been directed towards analyzing the rate of inflation change on both sides of the Atlantic.
- However, a significant aspect that has been somewhat overlooked pertains to the composition of the inflation measures employed within the pertinent inflation indices.
- It’s worth noting that inflation indices aren’t an entirely objective construct; rather it is subject to discretionary weightings regarding measurement and the assignment of weights to various components.
The Re-Rating in Asian Frontier Markets Has Begun – July 2023 Update
- Asian frontier markets had another solid month led by gains in Pakistan and Sri Lanka.
- The ongoing upward re-rating in Asian frontier markets does not surprise us as we have been communicating since the end of 2022 that this would happen as inflation and interest rates are peaking and our universe will rally strongly given that our markets entered 2023 at significantly discounted valuations.
- Year-to-date, many Asian frontier markets have significantly outperformed the region.
Curve Steepeners and the Boomer Trade
- As highlighted in our data dive yesterday on the curve we see the steepener case as increasingly compelling.
- From our portfolio, you will also know that we have been moving towards a boomer composition and in the following short note we’ll try to support that thesis.
- Why would the curve slope back our boomer position?
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