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Capital Daily

Capital Daily

The relationship between the US dollar and the stock market

We anticipate a renewed rally in the US dollar and further declines in US equity prices over the next twelve months or so.

24 May 2022

Capital Daily

We think the peak in Treasury yields is still to come

We doubt that the 10-year Treasury yield has peaked in this cycle. Admittedly, it has fallen back markedly on net over the past couple of weeks; having briefly climbed above 3.20% earlier this month, it is now at around ~2.85%. But, it has risen ~5bp so far today and we suspect that it will climb a lot more over the next 12 months or so.

23 May 2022

Capital Daily

We doubt consumer staples will continue to underperform “tech”

We doubt the consumer staples sector, which has been hit particularly hard in the recent sell-off in the S&P 500, will continue to underperform “tech”-heavy sectors. ECB Drop-In (24th May 10:00 ET/15:00 BST): Could the ECB deliver a hawkish surprise? Join economists from our Europe and Markets teams for a discussion about what to expect from the Bank’s tightening cycle, including the chances for a bumper hike in July or even an early move at next month’s meeting. Register now.

20 May 2022

Our view

Although the incoming economic data are likely to remain poor until around mid-2021, we forecast that “risky” assets will continue to outperform “safe” ones comfortably over the next couple of years. We also anticipate that this will be accompanied by a further rotation within risky asset markets – generally favouring the sectors, factors and regions hit hardest at the start of the pandemic – as well as more weakness in the dollar. The two key risks to these forecasts are i) that the pandemic takes another turn for the worse over the winter and a vaccine still takes a long time to develop, produce, and distribute; and ii) that policymakers withdraw support prematurely, undermining the economic recovery and the prospects for risky assets.