Capital Daily

Employment Report provides some cheer for markets

Today’s favourable reaction in the US stock market to April's softer-than-expected Employment Report has coincided with renewed hopes of interest rate cuts, judging by the initial plunge in the 2-year...

3rd May 2024 · 5 mins read

Capital Daily

Powell’s cautious message points to lower UST yields

This week’s FOMC meeting supports our view that bond yields will fall back a bit further this year.

2nd May 2024 · 3 mins read

Capital Daily

Taking stock of the recent surge in Treasury yields

We doubt the recent rise in US bond yields will continue much further, or significantly undermine the prospects of US equities.

1st May 2024 · 4 mins read

Capital Daily

What’s next for Chinese financial markets?

While we expect Chinese bonds and equities to make more gains in the near term, we think the outlook further ahead is not as bright for the latter.

30th April 2024 · 4 mins read

Capital Daily

What to make of the latest swings in the yen

Japan’s apparent intervention in support of the beleaguered yen may buy some time for the currency to stabilise, but is unlikely to lead to sustained turnaround until US interest rate expectations...

29th April 2024 · 4 mins read

Capital Daily

Higher yields no insurmountable obstacle for the NASDAQ

The NASDAQ 100 has shrugged off this week’s surge in real US Treasury yields amid a mixed bag of earnings reports from some of the ‘Magnificent 7’. (See Chart 1.) This suggests to us that the earlier...

26th April 2024 · 5 mins read

Capital Daily

Are Fed hikes coming?

Hikes are back on the agenda at some central banks and core PCE data for Q1 added to the hawkish mood in US markets. But we don’t think the Fed will feel the need to start hiking again. Indeed, given...

25th April 2024 · 5 mins read

Capital Daily

USD strength may delay, not derail, EM easing cycles

Even if the US dollar stays strong against most currencies this year, we think that much of the broad-based weakness in EM (emerging market) FX has run its course. While some EM central banks may now...

24th April 2024 · 4 mins read

Capital Daily

European corporate bond yields could fall further

We expect corporate bond yields in the UK and euro-zone to fall as rate cuts in those economies push down risk-free rates and strong risk sentiment narrows spreads further.

23rd April 2024 · 4 mins read

Capital Daily

Stock markets fall back: consolidation or worse?

Stock markets are having a tough start to the quarter, but we think that they will rebound, notably in the US, thanks to renewed enthusiasm about artificial intelligence.

22nd April 2024 · 5 mins read

Capital Daily

Geopolitics might not thwart a recovery in bank shares

All nine constituents of the S&P 500 diversified banks index have now released their earnings reports for Q1. While the performance of their shares has typically been underwhelming of late, in some...

19th April 2024 · 5 mins read

Capital Daily

Yield curve phoney war redux; how different is this time?

Despite the ongoing surge in long-term government bond yields, the US yield curve remains inverted. As such, it is worth revisiting what the implications are for financial markets, and how this...

18th April 2024 · 4 mins read

Capital Daily

Gilt yields may fall by more than Treasury yields

Today’s UK CPI release has not made a sustained impact on investors’ expectations over the path of Bank Rate, and the market pricing implies that investors are still discounting fewer cuts from the...

17th April 2024 · 5 mins read

Capital Daily

The correlation between bond yields and equities

The correlation between changes in bond yields and in equities has rarely been so negative, and we suspect this will continue as yields fall back and equities rebound.

16th April 2024 · 4 mins read

Capital Daily

Fed – not the Middle East – still the bigger worry for markets

Financial markets have, so far, taken the latest escalation in the Middle East over the weekend largely in stride. Our sense remains that, absent an even larger conflagration that disrupts energy...

15th April 2024 · 5 mins read