Latest from Lyxor
23 Sept 2019: The Fed cuts rates… again
As had been widely expected, the Fed cut policy rates by 25bp last week, but the committee was split and a majority of officials saw no justification for a third cut before the end of the year. Data suggested that US consumption remains resilient, while the Atlanta Fed GDPNow estimate suggested that the US economy will grow by 1.9% in Q3. There were signs of economic improvement in Europe, but data from China disappointed once again.
Next week investors are going to be keen to see the first estimate of Q3 US GDP growth. In Europe, the markets will be looking to survey data for clues as to whether Germany slipped into recession in Q3, while France will release consumer confidence and spending data, providing insight into the health of its consumer sector – a key driver of domestic growth. In the latest instalment of the Brexit saga, the UK’s Supreme Court may rule on the legality of Prime Minister Boris Johnson’s suspension of Parliament. Central banks will take centre-stage in emerging markets once again, with Thailand and the Philippines expected to cut rates.
Latest performance
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 23/09/2019
Still long US equities
US economic growth is expected to bottom out over the next quarter, which should help the Fed to anchor market expectations on its future policy actions. We believe the Fed will cut again at the December meeting. The US remains our preferred equity market due to the US economy’s domestic focus and as US stocks tend to be less volatile than those from other regions.
Buy European minimum-variance equities
Despite recent signs of stabilisation in activity in the euro area, lingering risks linked to Brexit, vulnerable consumer confidence and growth, and the risk of another escalation of trade tensions (with the potential for US tariffs on European luxury goods) are all reasons to maintain a cautious approach towards European equities. We believe a minimum-variance strategy is the best way of accessing the asset class at present.
Emerging debt less volatile than emerging equities
Monetary easing around the world should continue to bolster the performance of emerging-market debt, which provides access to the emerging world’s growth potential but with less volatility than emerging equities.
Things we are watching out for
The Main Event
Lyxor strategists on the key moments in the week ahead
08
July
Coming soon...
Other major events
4 more things to put in the diary
7-8 Sept
09
Sept
12
Sept
ECB decision, OPEC, US, CPI
16
Sept
China data
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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 23 September 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.
These are the views, opinions and recommendations of Lyxor International Asset Management (“LIAM”) Cross Asset and ETF research analysts and/or strategists. 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.
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