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. HEM: Jul-26 Views & Challenges
- Energy supply remains constrained, but the market has moved on thematically. High oil product prices quietly sustain the shock.
- ECB action helps EA inflation back to 2% in 2027, while UK excesses persist and the US outlook sits in between.
- We see a BoE hike and the ECB/Fed on hold. Market pricing for the BoE/Fed spread is inconsistent with fundamentals and can reverse.
2. BoE Pricing Is Too Fed Up
- Market pricing embraced our long-held view that the Fed could hike this year, but in fading BoE moves, has ended up with too much tightening priced relative to the BoE.
- The UK’s structurally rising unemployment rate has passed, and is no longer much worse than a year ago. The monetary setting is not obviously tight or tighter in the UK.
- Inflation is a more persistently excessive problem in the UK, compounded by another energy shock. Incoming fiscal loosening also justifies a tighter BoE than Fed path.
3. HEW: Re-Energised Supply Shock
- Renewed attacks in the Gulf and Trump’s assertion that the ceasefire is dead reversed the MOU-related decline in gas and electricity prices, although oil remains cheap.
- Rate expectations have increased in response to the intensified energy supply shock, especially in Europe, but we still see the BoE as underpriced relative to the Fed.
- Next week’s US inflation data should show good news from oil price falls, while the final EA release can confirm it. Policy decisions will come in Canada and Korea.
4. LEVERAGED ETFs: “Pigs Get Fed, Hogs Get Slaughtered”
- The global leveraged ETF market has grown to an historically high level in both AUM and trading volume, increasing risks and volatility for global equity markets.
- Long and Inverse ETF product analysis shows that investors are actually holding leveraged long ETF positions in single stocks and markets, no longer using the products for trading and positioning.
- The problem for markets is not only the parabolic rise in leveraged ETFs feeding through to stocks and markets via rebalancing, but also the overall net positioning being heavily long.
5. Asian Equities: Second Highest Ever Foreign Selling in June; Nascent Recovery in India and ASEAN
- In June, foreign institutions sold US$54.7bn of Asian equities, second only to the US$69.9bn selling in March. FIIs sold US$30.7bn in Korea, US$19bn in Taiwan and US$5.2bn in India.
- In H12026, foreigners have sold US$157bn Asian equities – the most concentrated bout of selling ever. They sold US$96bn in Korea alone, US$29.8bn in Taiwan and US$29.3bn in India.
- We identified India and Korea as oversold markets. India is now being bought back by the FIIs – US$312m in July till date, but Korea continues to be sold heavily.
6. RBNZ Starts Cautious Tightening
- The RBNZ’s 25bp OCR hike to 2.50% begins a cautious tightening phase, aimed at returning inflation sustainably to the 2% target midpoint.
- The decision aligned with the headline consensus but disappointed the dovish minority, reinforcing a bias towards higher rates as neutral is seen near 3%.
- Future OCR moves will be data‑dependent, driven by medium‑term inflation pressures, domestic price‑setting behaviour, spare capacity and the exchange rate path.
7. Vietnam Economics: Another Strong but Uneven Quarter for GDP Growth
- Capital formation, including precautionary stockbuilding, helped Vietnam maintain a strong rate of GDP growth in Q2 2026.
- Softer growth in services points to domestic demand headwinds as higher energy prices erode real purchasing power.
- The year-to-date performance, however, leaves Hanoi’s full-year growth target out of reach. The quality of growth will also be more uneven than the headlines imply.
8. US Economic and Funding Conditions Remain Resilient, but Limited Scope for Improvement
- Despite the energy shock due to hostilities in the Middle East, US economic activity has remained resilient, but business and consumer sentiment remain below pre-conflict levels.
- US funding conditions remain favourable during 2026 despite the geopolitical backdrop, but scope for further improvement is limited. The Fed’s latest stress tests suggests banks are in decent financial shape.
- Fiscal policy plays an important role in determining funding conditions via banks and the repo market. The fiscal outlook is complicated by uncertainty about tax revenues associated with expiring tariffs.
9. CX Daily: How a South China Port Is Redrawing the Regional Logistics Map
- In Depth: How a South China Port Is Redrawing the Regional Logistics Map
- In Depth: China’s Inbound Tourism Rebounds, but Supply Gaps Cloud Outlook
- Analysis: Gold Caught in a Tug-of-War Between Asian Bulls and a Hawkish Fed
10. CX Daily: The AI Token Takeover in China
- Cover Story: The AI Token Takeover in China
- China Overhauls Stock Trading Rules to Boost Efficiency, Curb Speculation
- Guotai Haitong Becomes First Chinese Brokerage to Trade Offshore Yuan in Shanghai FTZ
