Bouncing back?
? Global stocks and bonds rose and the USD fell this week, despite a tighter-than-expected US job market and rising US, Euro area inflation. This suggests markets have largely priced in these concerns.
? Emerging Markets, particularly China, led the equity market gains, following yet another strong reiteration by China’s State Council of the need and availability of policy support. How do you interpret the recent strong performance in Hong Kong/China equities? Are technicals for China markets supportive? What are the implications of higher Fed rates and balance sheet reduction on your
preferred bond asset classes? Is the USD rally over?
? We see the market moves supportive of our world view this year: above-trend growth leading to the outperformance of US and Euro area equities and Developed Market High Yield bonds, and China’s
policy support enabling the recovery of beaten down Asia USD bonds.
? US Q4 earnings and companies’ outlook for 2022 profits are the next focus. Estimates for 2022 earnings suggest the bar for another year of outperformance is low.