Monthly: A Summer of Discontent


Global market sentiments have made an abrupt turn for the worse in the past month. We see little chance of a meaningful respite any time soon.
Taimur Baig, Irvin Seah31 May 2019
  • Recent intensification of trade wars is threatening a nascent recovery in global trade
  • FX: We expect the Chinese yuan to hold its ground around 6.90 into the G20 Summit
  • Rates: While technicals suggest that US yields have room to head lower, we are turning wary
  • Equities: We believe that market volatility will remain high in the second half of the year
Photo credit: AFP Photo


• Economics: Global market sentiments have made an abrupt turn for the worse in the past month. We see little chance of a meaningful respite any time soon. In the macro horizon, recent intensification of trade wars is threatening to undermine a nascent recovery in global trade. Positive data surprises are few and far between, while financial market volatility is on the rise.

• FX: We expect the Chinese yuan to hold its ground around 6.90 into the G20 Summit on June 28-29. The British pound is ripe for revisiting its post-referendum low around 1.20 (USD/GBP)

• Rates: While technicals suggest that US yields have room to head lower, we are turning increasingly wary. It would require a sizable shock to the US economy to prompt the Fed to cut rates even more aggressively than what is already priced in the market.

• Equities: We believe that market volatility will remain high in the second half of the year. We are not expecting a collapse in Asian equities, but given that market valuations are high and dataflow poor, investors should stay defensive in their positioning.

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Taimur Baig, Ph.D.

Chief Economist - G3 & Asia
taimurbaig@dbs.com


Irvin Seah

Economist - Singapore, Malaysia & Vietnam
irvinseah@dbs.com

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