Cet article vous est offert par RBC BlueBay Asset Management.

Make Japan Great Again (MJGA)

Japan skyline

Key points

  • Risk assets continued to trade well, as lower government bond yields and hopes for US rate cuts helped consolidate sentiment.
  • Fed Chair Powell’s testimony before Congress was not as hawkish as some feared.
  • Recent meetings give us confidence in an upcoming policy shift by the Bank of Japan. It seems clear that the underlying trend in Japan is one of change.
  • The People’s National Congress affirmed a growth target of 5%, but we remain downbeat on China’s prospects.
  • Eurozone policymakers continue to wait for more progress on inflation before easing policy.

US yields tracked lower over the past week, with Powell’s testimony to Congress not as hawkish as some may have feared. With the Fed Chair reaffirming a narrative of rate cuts in the months to come, notwithstanding recent strong economic data and an equity market hitting record highs, yields have declined around 20bps from the highs towards the end of last month.

Meanwhile, some softening in recent ISM survey components has been latched upon as a sign that economic activity could be starting to slow. However, it strikes us as premature to jump to such a conclusion given the scarcity of supporting evidence. On that basis, we now feel more inclined to move towards a short stance on US rates, should yields continue to move lower.

Super Tuesday largely confirmed the prospect of the 2024 race for the White House as Trump versus Biden. At this time, Trump continues to look the favourite to secure the Presidency, with the former President recording a solid lead in the six key swing states, which will decide the election. Clearly, plenty can still happen between now and November.

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