In today’s briefing:
- Japan Watch: Flows in JPY and JGBs after the YCC decision
- 5 things we watch: Downgrades, Cyclicals, Oil, JGBs and GDP/GDI
- Business Cycle Watch – Recession or rebound?
- US Downgrade! Now What?
- AFC Iraq Fund July 2023 Update: “Market Rallies as It Begins to Discount the Budget’s Passage”
- AFC Uzbekistan Fund July 2023 Update
Japan Watch: Flows in JPY and JGBs after the YCC decision
- The change to the YCC-policy in Japan caught a majority of investors off guard, but so did the subsequent flows and moves in Japanese markets.
- We kept reiterating that JGB yield risks were to the upside, while the JPY could see downside, which is exactly what has happened.
- In this piece, we will try to elaborate on why that is and why we see a slow grind to 1% in 10yr JGB yields alongside a move in USDJPY to +150 territory.
5 things we watch: Downgrades, Cyclicals, Oil, JGBs and GDP/GDI
- A credit downgrade of the US sovereign debt amidst a steepening of global curves triggered by the Bank of Japan finally making mini-steps towards normalization of monetary policy.
- Macro never fails to surprise and here is how we view the five most present topics in global macro.
- This week we are watching the following 5 topics within global macro: you can find in depth research pieces on all topics on the links below or just read our brief summary in this article.
Business Cycle Watch – Recession or rebound?
- Welcome back to another business cycle-themed article post the business cycle week where we covered a potential rebound in manufacturing and what that might mean for assets in the time to come.
- Today we shed some light on the kings of business cycle data – GDP and GDI – which are both widely known for being THE metrics to watch (together with the labor market) when assessing if the economy is actually slowing down or not.
- Normally the two follow each other quite closely, as they are conceptually identical, but currently, we are faced with an interesting gap with GDI screaming recession while GDP is hinting at a rebound amidst a skyrocketing fiscal deficit, higher public interest expenses and a much stronger labor market.
US Downgrade! Now What?
- Are we back in 2011 or what? After the US debt ceiling drama earlier this year we just witnessed a rating agency downgrading the US exactly like in 2011 – back then S&P, this time Fitch.
- Today you are likely to read plenty of scary and fear-mongering headlines.
- In this piece instead we’ll take a step back and rationally assess what the US downgrade means for investors and markets out there.
AFC Iraq Fund July 2023 Update: “Market Rallies as It Begins to Discount the Budget’s Passage”
- The AFC Iraq Fund was up an estimated 8.2%, underperforming its benchmark, the Rabee Securities RSISX USD Index, which was up 9.2%.
- For the year, the AFC Iraq Fund is up an estimated 49.9%, outperforming its benchmark’s 42.3% increase.
- The market’s technical picture continues to be positive, with the macroeconomic fundamentals discussed last year supporting our view that the market’s uptrend will likely remain in force.
AFC Uzbekistan Fund July 2023 Update
- July saw most of the fund’s portfolio companies complete their filing of annual 2022 results, as well as results for the second quarter of 2023.
- In short, earnings continue to impress! While we are seeing multiple compression as share prices remain relatively flat, this gives us the opportunity to continue deploying capital into Uzbekistan’s blue-chip companies at attractive prices, in anticipation of the next phase of the re-rating.
- The July 2023 fund NAV fell to an estimated USD 1,831.2 (-0.8%) or +83.1% since inception on 29th March 2019.
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