- The US government shutdown has shifted the narrative away from the soft labour market, allowing the AI-driven equity rally to dominate. The suspicion is that growth can once again prove more resilient than most expected. Yet the September FOMC meeting made it clear that the Federal Reserve has shifted into risk management mode on jobs and should cut twice more this year.
- After this recent short squeeze in the dollar, we’re looking for a resumption of the dollar bear trend into Nov-Dec. Lower short-dated US rates will see bond investors raise FX hedge ratios.
- We think the European Central Bank is done cutting at 2.00%. We’re not looking for the French political crisis to trigger a broader crisis in Europe.
