In today’s briefing:
- Tariffs Create New Central Bank Agendas, While Bank of Japan Faces Fiscal Policy Nightmare
- Bullish Exhaustion = Pullback or Consolidation
- Don’t Buy That TACO Just Yet
Tariffs Create New Central Bank Agendas, While Bank of Japan Faces Fiscal Policy Nightmare
- Policy uncertainty still remains elevated despite the China-US tariff truce. Tariffs have created new easing agendas for central banks, while the Fed awaits new incoming economic information.
- US tariffs threats have forced the Bank of Japan (BoJ) to pause policy normalisation plans. Japanese government bond market stress may increase once the BoJ resumes raising its policy rate.
- Governments and central banks are facing legacy issues from the period of combined easy monetary and fiscal policy stances as bond markets question sovereign governments’ capacity to borrow.
Bullish Exhaustion = Pullback or Consolidation
- The recent violation of an upward sloping trend line in the face of positive news reinforces our view that the U.S. equity market is in a wide trading range.
- Technical conditions point to either a pullback or consolidation in the short-term.
- Elevated valuation and continued uncertainty over trade policy, fiscal policy and the growth outlook all serve to create a roof over stock prices.
Don’t Buy That TACO Just Yet
- The U.S. Court of International Trade unanimously ruled against the Trump Administration and struck down a whole range of tariffs by citing a lack of authority.
- In reaction, President Trump doubled down by opposing and appealing the decision. The government has workaround options in light of the court decision: The trade war will continue.
- Investors should continue to tilt toward the “Sell America” trade by avoiding USD assets. The court decision prolongs and exacerbates the uncertainty over the effects of the trade war.
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
Unlock all research summaries