In today’s briefing:
- The Great Game – Why No News from Ukraine? 4 Important Points and Predictions
- Us Debt Countdown – the X-Over Data Is Approaching! when Will Usd Funding Markets Be Impacted?
- Changes in Portfolio Weights: Calibrating the Weight of Nominal and Real Assets.
- EM by EM – Argentina and the Real De-Dollarisation
- Spending Watch: The Great Question About Excess Savings
- BoE: Persisting Under Pressures
The Great Game – Why No News from Ukraine? 4 Important Points and Predictions
- Why are we getting no news from the Ukrainian Spring Offensive?
- What is going on with Wagner and the Bakhmut Battle?
- Here’s our take and predictions for the spring and summer
Us Debt Countdown – the X-Over Data Is Approaching! when Will Usd Funding Markets Be Impacted?
- In a continued bank failure scenario, the x-over date for the US debt ceiling may be reached already during May
- What’s the political outlook? Are we going to get a solution in time?
- What does that mean for the entire USD funding market?
Changes in Portfolio Weights: Calibrating the Weight of Nominal and Real Assets.
- We increase the weight of Developed Market Equities but remain short/underweight. We lower the weight of gold and cash and remove the marginal overweight in Developed Market Treasuries.
- US equities have celebrated the end of more recent Fed tightening cycles and tend to outperform Gold and Commodities when inflation has peaked.
- We remain underweight Developed Market Equities because of deteriorating Macro Indicators and earnings expectations that are too optimistic.
EM by EM – Argentina and the Real De-Dollarisation
- Argentina is a state of permanent fiscal dominance but its economic weakness does not correspond to its geopolitical importance
- The USD is not losing its reserve currency status anytime soon but China is actively trying to de-risk its supply chain and integrate key markets under its umbrella
- Argentina remains uninvestable for the time being and the economic outlook is bleak. That may just change if the political winds do. For now, we remain skeptical from the sideline
Spending Watch: The Great Question About Excess Savings
- Fiscal stimulus and money supply is the main driver of the increase in consumer spending and excess savings
- Excess savings remain solid, but the outlook is looking darker based on the approach you take in estimating future savings
- Decreasing profit margins and increasing real wages might lead to better consumer conditions, but also an inflation wave vol. 2
BoE: Persisting Under Pressures
- The BoE hiked by 25bps again in May-23, with the same two dovish dissenters as we forecasted. The market and consensus also adopted this view since March’s meeting.
- Upside economic news has extended excess demand and inflation, with its persistence able to drive further rate hikes. That seems likely amid worrying second-round effects.
- We maintain our call for a final 25bp rate hike in June and see upside risk for August. Cuts should at least wait until after the Apr-24 pay rounds.
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