Monthly: Can markets pull up the global economy?
- (i) Bonds are supported by low inflation and ample liquidity
- (ii) Global demand is seen bottoming due to China stimulus
- (iii) Trade is expected to be helped by trade war resolution
Backward looking data is poor, but the markets are ignoring them for three key reasons:
First, with no sign of inflation in the horizon and ample liquidity being promised by G3 central banks, both nominal and real spreads are well supported
Second, expectation of China stimulus efficacy is causing observers to believe that freight rates, commodities, and auto sales have bottomed
Third, some sort of resolution in China-US trade strife is expected widely, potentially removing a dark lingering cloud over global trade
Rates: Yield curve inversion is flashing a US recession in the horizon, but probability of a recession/slowdown over the next twelve months is overstated, in our view.
FX: DXY to remain firm among Brexit drama, EU slowdown, and EMFX stress
Credit: we see opportunities for value diminished, even in the sub-investment grade space
Equities: Expect volatility with downside risks for both EM and DM markets
To read the full report, click here to Download the PDF.
The information herein is published by DBS Bank Ltd and PT Bank DBS Indonesia (collectively, the “DBS Group”). It is based on information obtained from sources believed to be reliable, but the Group does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation & the particular needs of any specific addressee. The information herein is published for the information of addressees only & is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Group, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Group or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Group & its associates, their directors, officers and/or employees may have positions or other interests in, & may effect transactions in securities mentioned herein & may also perform or seek to perform broking, investment banking & other banking or financial services for these companies. The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Sources for all charts & tables are CEIC & Bloomberg unless otherwise specified.
DBS Bank Ltd., 12 Marina Blvd, Marina Bay Financial Center Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
PT Bank DBS Indonesia, DBS Bank Tower, 33rd floor, Ciputra World 1, Jalan Prof. Dr. Satrio Kav 3-5, Jakarta, 12940, Indonesia. Tel: 62-21-2988-4000. Company Registration No. 09.03.1.64.96422.