In today’s briefing:
- What Did Global Liquidity Do Last Week?
- Bond Market Monitor: The Bullish Case for Bonds Continues
- Positioning Watch: The EUR Is the Only One Left at the Party
- Wage Watch: Wage Negotiations in Germany to Taint the Disinflationary Picture?
- USA: Record Underweight as Shift to Europe Accelerates
What Did Global Liquidity Do Last Week?
- We exlore a new weekly time series on Global Liquidity. The data start in 2010 and reveal a strong leading relationship to World asset markets. This is confirmed statistically
- Latest data show a US$5 trillion rise since the end-2022 and a US$10 trillion increase since the cycle low in late-October 2022. Further gains are bullish for asset prices
- Behind expanding Global Liquidity is a strengthening World Shadow Monetary Base. This measures the collateral pool than can be levered up by credit providers. It is leading the way
Bond Market Monitor: The Bullish Case for Bonds Continues
- Xi’s call with Zelensky this week may not have any immediate impact but we believe the world is moving in the right direction.
- The 2/10 spread remains in negative territory while inflation remains sticky but moved sideways.
- We are leaning in favor of investment grade bonds and “BB” high yield bonds in general
Positioning Watch: The EUR Is the Only One Left at the Party
- Overall equity positioning remains short but the sentiment is not overly bearish across styles/sectors
- EUR seems like the new safe haven. In will likely turn, but as long as the events are centered around the US, the EUR could be a place to hide
- Industrial metals are not popular. Copper positioning has quickly went back to being net short again after being net long last week
Wage Watch: Wage Negotiations in Germany to Taint the Disinflationary Picture?
- This week Germany’s biggest public union Verdi reached an agreement with the government, and other unions will likely follow
- The wage negotiations will surely have an effect on core inflation in Germany and EU
- The average worker conditions will improve, positively impacting the economy
USA: Record Underweight as Shift to Europe Accelerates
- Global equity funds move to record USA underweight of -7.02% below the benchmark.
- Heavy rotation out of the USA and in to the major European nations over the last 6-months.
- Record spread between the US underweight/DM Europe overweight highlights strong conviction in US underperformance and EU outperformance.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
