Latest from BCA Research
The Fed is betting that the usual non-linearity of unemployment is different this time, but so far, there is nothing to suggest that it is different. We discuss the key signposts to watch out for, plus the implications for interest rates and asset allocation.
In this Strategy Insight, we go over the RBA’s recent decision and the implications of its hawkish message for AUD trades.
The Small Caps and high vol stocks outperform during an optimistic January. As a result of its low vol tilt, USHQ underperformed the SPY, however the USHQ SMID Cap strategy outperformed its benchmark through strong selection in growth sectors.
The risk-reward profile of Egyptian domestic bonds are very attractive over the next six to 12-months. Go Long.
Mexico is caught between crosscurrents. On the one hand, headline and core inflation are at multi-decade highs. On the other hand, genuine inflationary pressures are subdued, and fiscal and monetary policies are hawkish. Going forward, the economy will decelerate meaningfully, but likely achieve a soft landing as the central bank will be able to cut rates in H2 2022. Further, the nation’s healthy external accounts will put a floor in the domestic slowdown. We continue to overweight Mexico across all EM asset classes.
The Fed’s actions at its meeting last Wednesday were no surprise – downshifting to 25 basis points while guiding for more hikes was widely expected – but Chair Powell’s newly conciliatory tone at the press conference helped to spark a two-day equity rally. We remain overweight equities, expecting the S&P 500 to rally into the mid-4,000s at some point in the first half.
