This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. Global Rates: European rates market update
- Market conditions have shifted with increased rates against reduced liquidity, leading to recent sell-offs.
- Despite market noise and uncertainty, the outlook remains constructive on intra-EMU spreads and Euro Area government bond supply for 2025.
- The UK market has seen significant sell-offs in 10-year gilt yields, influenced by fiscal policies and US market dynamics, with expectations of further easing by the Bank of England.
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2. Steno Signals #179: A handful of trades for 2025
- Happy Sunday, and welcome to our weekly editorial on all things macro markets.
- In full transparency, we’ve been a few weeks early on our bet for lower bond yields, which slightly wrongfooted our risk asset view heading into Christmas—after being on a remarkable roll for several months.
- We remain puzzled by the resilience of bond yields (and the USD) despite softer economic surprises and flattening inflation expectations.
3. The Week Ahead – Happy New Year?
- Central banks in the US, Europe, and Asia have made policy rate announcements, with the Fed in the US easing rates and the ECB expected to continue cutting rates.
- The US economy is expected to see slowing growth momentum in the coming year, with concerns about policy risks from the incoming Trump administration.
- In Asia, Japan is forecasted to experience above potential growth with rate hikes, while China continues to struggle with low inflation and credit growth.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
4. Trump’s Messy Governing Challenges
- We reiterate our belief that in the absence of a recession the S&P 500 should register low single-digit gains for 2025.
- However, the emergence of policy implementation risk by the incoming Trump Administration makes us believe the market will experience several volatility shocks during the year.
- Be prepared for a choppy but mildly positive year for stock prices in 2025.
5. Another Way to Skin a Cat?
- Although data interpolation has a long history, the various linear and nonlinear techniques have pros and cons
- I introduce a hybrid technique to interpolate monthly US inflation-adjusted GDP going back to 1947
- My monthly GDP nowcast through November seems consistent with some growth moderation on a three-month and six-month basis
6. CrossASEAN Indonesia Strategy – Parting Clouds
- The Indonesian stock market was down 2% over the last year despite a flurry of inflows in the summer but this year looks interesting with a new government in place.
- GDP growth forecasts are more optimistic for 2025 and government stimulus should help to drive higher consumption, with FDI driven by more value-added investments in the EV-related projects.
- Increasing digitalisation of the economy and greater use of AI will drive profitability and data centre growth. Interest rates are expected to fall -50-100bps which should also be supportive.
7. CrossASEAN Ground Zero – Let the Quest Begin
- We look at the major themes and challenges for listed tech stocks in Southeast Asia including Sea Ltd, GoTo Gojek Tokopedia, Grab Holdings, Global Digital Niaga (BELI), and Bukalapak.
- Profitability remains the key quest all in 2025, with only Sea Ltd achieving this in a true and sustainable manner, with Grab moving closer ahead of GoTo, BELI, and BUKA.
- Increasing take rates through seizing more of the value chain in logistics and advertising is another trend, with Fintech a core focus in shifting the needle on profitability and cross-selling
8. Korea Value Up Index: Winners and Losers in 2025 YTD
- In this insight, we discuss the details of the share price performances of the Korea Value Up Index (especially among the index constituents) this year.
- It appears that many traders are buying beaten up, higher beta stocks in Korea that were excessively pushed to much lower levels last year.
- Among the top 20 best performing stocks in the Korea Value Up Index this year, 15 of them (75% of the top 20 stocks) are listed on KOSDAQ.
9. 5 Major Potential Policy Changes in the Korean Stock Market Pushed by the FSC in 2025
- On 8 January, the Financial Services Commission (FSC) announced 5 major potential policy changes in the Korean stocks market which could get implemented in 2025.
- The mandatory lock-up periods for the institutional investors could result in the institutional investors that are active in Korean IPOs to reassess their trading strategies on newly offered issues.
- Choi Sang-Mok was the most important government official spearheading the numerous financial reforms in Korea. Now that he is the acting President, he is likely to accelerate these financial reforms.
10. 2025 High Conviction Idea: The Case for a Rotation Out of India into HK/China Part 2
- Risk reward favours this shift in allocation between these markets
- Weakness in HK/China markets in Q1 as President Trump takes office will provide an opportunity
- China continues to incrementally promote consumption as the new lever of growth