The market seems to be on a winning streak after the Fed made its first rate hike last week.
This week, Trump will be welcoming Xi during the Chinese president’s US visit. A positive outcome would be some tangible agreements on the mutual tariffs. The US export ban on chips to China is off the table for now.
In the medium term, the intensification of the US-Iran conflict, as well as the Russia-Ukraine war, could prolong heightened oil and gas prices. The oil infrastructure in these regions has been hit heavily by drones in the past few months, so it may be practically impossible for supply to meet all demand, even in the event of a truce.
That could push the G10 central banks to tilt further hawkishly. Simply put, we need to prepare for a higher-yield environment for the next 12 months, instead of expecting quick reversals.
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Disclaimer
This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities.
Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.