Bridgewater warns US inflation fight is far from over
The investment chief at one of the world’s top hedge funds has warned the US battle with inflation is far from over, and bets on a rapid series of interest rate cuts from the Federal Reserve next year are premature. Bob Prince, co-chief investment officer of Bridgewater Associates, said markets were wrong to assume the Fed will soon ease monetary policy. “The Fed is not going to cut,” he told the Financial Times. “They are not going to do what is priced in.” Pricing in futures markets indicates that investors anticipate one further 0.25 percentage point rate rise from the Fed’s current target range of 5 to 5.25 per cent by the autumn. Over the following 12 months they expect the central bank to reverse course, cutting borrowing costs six times to around 3.8 per cent by November 2024. “Inflation has come down but it is still too high, and it is probably going to level out where it is — we’re likely to be stuck around this level of inflation,” Prince said. “The big risk right now is that you get a bounce in energy prices when wages are still strong”, which could drive a rebound in inflation, he added. Prince, who oversees the Connecticut-based firm’s assets with co-CIOs Karen Karniol-Tambour and Greg Jensen, said he believes core inflation is likely to bottom out between 3.5 and 4 per cent, pushing the Fed to tighten monetary policy further and disappointing investors who this week sent US stocks to their highest level in over a year. That tightening “could take the form of holding rates steady in the face of expectations of a cut”, he said. Source: FT
The Economic potential of generative ai, the next productivity frontier:
The Economic potential of generative ai, the next productivity frontier Source: McKinsey
SEC Formally Accepts BlackRock Spot Bitcoin ETF Application for Review
SEC Formally Accepts BlackRock Spot Bitcoin ETF Application for Review. The procedural move suggests that the federal agency will give the closely-watched application a serious look. BlackRock's application to offer a spot Bitcoin exchange-traded fund (ETF) has been added to the official docket of the Securities and Exchange Commission as part of its proposed rule change process. The move, recorded late Thursday, advances the most closely-watched Bitcoin-related proposal to the SEC to date. Source: Decrypt
This didn't do the headlines but the fact is that Trade-weighted Euro reached a new all-time high this week
Source: Bloomberg
Speculation is Back
Source: Bloomberg
15% of global internet traffic is Netflix
Source: Statista
World Debt
Source: BofA
Emerging Market Local Currency Debt: Sustaining the Rally?
Emerging Market local currency debts have proven to be top performers (+18%) since reaching the peak in the 10-year US Treasury yield (4.25%) in October 2022, during this rate hike cycle. This specific segment of the fixed income market has offered attractive real rates, leading to the strengthening of EM currencies against the US Dollar. Notably, volatility in EM currencies has reached its lowest level since March 2020 and the global pandemic. As emerging market central banks prepare for potential monetary policy "pivot" (starting with Chile, Hungary and Brazil?), the question arises: will this trend continue? Or could we see a break in the rally, despite the favorable gap in nominal policy rates between EM and DM, while the gap in headline inflation reaches its tightest level? Source : Bloomberg
