In today’s briefing:
- EM Gold Rush: The pressure valve amid Asian FX debasement risks?
- 5 Things We Watch – Rates Pricing, Bond Positioning, Equities Setback, USD Wrecking Ball…
- Asia Ex-Japan Q1 Performance & Attribution: Strong Start for Active Managers
- BoE Should Move Behind the Fed and ECB
- Australia Unemployment Rate 3.84% (consensus 3.9%) in Mar-24
- GEM Funds Outperform in Q1. Long-Term Active Vs Passive Performance Compelling.
- Scandi Watch: Assessing the path for SEK and NOK rates
EM Gold Rush: The pressure valve amid Asian FX debasement risks?
- Welcome to this week’s edition of our EM-focused weekly editorial.
- This week, we’ve decided to look into the reemerging weakness in Asian FX, and how this corresponds with the still strong momentum in gold prices.
- Gold rallies have historically coincided with a weaker USD.
5 Things We Watch – Rates Pricing, Bond Positioning, Equities Setback, USD Wrecking Ball…
- Macro is truly back with central banks and pricing of policy rates back on the top priority list amongst traders and investors.
- Powell’s remarks from yesterday confirmed fears of the Fed deviating from their promised rate cuts back in December, and the question will now be, whether they will cut rates at all.
- A pivot from a pivot is tough, but it might be exactly what’s going to happen.
Asia Ex-Japan Q1 Performance & Attribution: Strong Start for Active Managers
- Strong start to 2024 as majority outperform: Average returns of 3.3% beat the iShares Asia Ex-Japan benchmark, with 66% of funds outperforming.
- Technology Sector Drives Returns: Taiwan and South Korean Tech contribute the most to returns, whilst China Financials and Healthcare drag on performance.
- HDFC Bank and AIA Group costly: Both stocks are among the top overweights among Asia Ex-Japan investors. Poor performance this quarter cost managers ~ 50bps in losses versus the benchmark.
BoE Should Move Behind the Fed and ECB
- Hawkish surprises in the UK and US data pushed back rate cut pricing. Dovish comments from Bailey still weigh on BoE rates, inappropriately keeping pricing below the Fed.
- Underlying inflationary pressures are worse in the UK, where wage growth is persistently high and not backed by productivity, causing the UK’s services inflation to be higher.
- Prevailing policy settings don’t seem set to drive down UK inflationary pressures before the US. Unemployment is trending similarly, suggesting similar monetary tightness.
Australia Unemployment Rate 3.84% (consensus 3.9%) in Mar-24
- Australia’s unemployment rate in March 2024 increased slightly less than predicted, showing relative stability in the labour market.
- The 3.84% unemployment rate is still higher than both the one-year and long-term averages.
- Employment decreased, indicating a weaker demand in the labour market.
This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.
GEM Funds Outperform in Q1. Long-Term Active Vs Passive Performance Compelling.
- Strong start to 2024 as majority of GEM funds outperform: Average returns of 2.8% beat the iShares MSCI EM ETF by 0.66%, with 63% of funds outperforming.
- Technology Sector Drives Returns: Technology sector the key contributor to returns, with TSMC accounting for just over half of total fund returns on the quarter.
- Active vs Passive: Q1 performance adds to GEM active fund’s impressive record of outperformance. 5-year average GEM fund returns are +7.4% ahead of the benchmark iShares MSCI EM ETF.
Scandi Watch: Assessing the path for SEK and NOK rates
- Welcome to a short and sweet Scandi special.
- After years of working at the biggest bank in the Nordics, I have developed a strong understanding of the rate path model of Norges Bank and we have developed a “cheat sheet” that can live track the path, if it was to be hypothetically updated daily.
- The overwhelming conclusion is that the path has shifted in a dovish direction since the MPR-1 meeting in March in contrast to global developments.
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