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Latest from Lyxor

Latest from Lyxor

20 May 2019: China hits back

The trade war escalated last week after China retaliated to higher US tariffs by imposing $60bn of its own duties on US goods, with effect from 1 June. The PBoC meanwhile downplayed fears of a rapid and continuous currency depreciation. So far, Chinese equities have proved relatively resilient given markets are anticipating additional policy measures in support of the economy.

Elsewhere, eurozone data provided further evidence that underlying inflation is gradually building, and that recent economic weakness has had little impact on price pressures. In Italy, PM deputy PM Salvini hardened his rhetoric on the budget and the BTP/bund spread widened further. Finally, UK PM May agreed to a timetable for her departure, dependent on the outcome of the fourth vote on Withdrawal Agreement in early June.

Up next? An awful lot, notably on Thursday, when central bank minutes, economic surveys and other high frequency data will be disclosed – and the winner of India’s general election will be announced. 

Source: Lyxor International Asset Management. Figures reported in local currency terms. Past performance is no guide to future returns. Data as at

Our key calls

Week commencing 20/05/2019

Market conditions support US treasuries

Lower Q2 GDP growth expectations and a greater chance of a rate cut by year end – now priced at around 80% - provide more support for US government bonds. The latest Fed minutes (Thursday) and a flurry of high frequency data over the week should tell us more about the interest path and Q2 activity.


More short-term volatility for Italian bonds

The week ahead should also help answer whether the euro area’s solid Q1 was a sign of things to come. We think it was. For all that, the markets will be keeping a watchful eye on Italy, where PM Salvini is defying Europe on the Italian budget. The EC is likely to publish its assessment of the country’s stability programme after the weekend’s European elections.

Political stability supports Indian equities

In Asia, the markets will be following any trade developments closely, but developments in Japan – where Q1 GDP is likely to have contracted – are also important and could lead to more stimulus. Finally, the results of India’s general election will be released on Thursday. We expect incumbent Narendra Modi to win, albeit with a reduced number of seats in Parliament.

Things we are watching out for

The Main Event

comming soon

20
May

Coming soon...

Other major events

4 more things to put in the diary

06 June

ECB meeting

19
June

Fed meeting 

25 - 26
Jun

OPEC meeting

2
July

Inaugural new EU Parliament

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These are the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists as at 08 April 2019. To the extent that this research contains trade ideas based on macro views of economic market conditions or relative value, it may differ from the fundamental Cross Asset and ETF Research opinions and recommendations contained in Cross Asset and ETF Research sector or company research reports and from the views and opinions of other departments of LIAM and its affiliates. Lyxor Cross Asset and ETF research analysts and/ or strategists routinely consult with LIAM sales and portfolio management personnel regarding market information including, but not limited to, pricing, spread levels and trading activity of ETFs tracking equity, fixed income and commodity indices. Trading desks may trade, or have traded, as principal on the basis of the research analyst(s) views and reports. Lyxor has mandatory research policies and procedures that are reasonably designed to   ensure that purported facts in research reports are based on reliable information and (ii) to prevent improper selective or tiered dissemination of research reports. In addition, research analysts receive compensation based, in part, on the quality and accuracy of their analysis, client feedback, competitive factors and LIAM’s total revenues including revenues from management fees and investment advisory fees and distribution fees. Click here for more.