📈 Geopolitical stalemate, cooling jobs and inflation
📊 Easing rate hike expectations: July US CPI continued to moderate in line with expectations, while core dropped to the lowest level since 2021. In addition, US non-farm payroll unexpectedly contracted in July. These data prints on the margin give the Fed more breathing room to remain on hold through the end of the year, supporting equity markets.
💵 US earnings continue to drive equity outperformance: With the cooling economic data softening bond yields, coupled with still strong reported earnings, have offset risks from the ongoing stalemate in the Middle East. The equity rally appears to be broadening out, beyond the largest tech companies.
🤖 AI IPO wave: Strong demand for recent China tech IPOs signals a structural re-rating around AI. New listings are likely to broaden participation and direct capital towards semiconductors, robotics and AI.
💰 Opportunities in short-duration bond: The backdrop of the Fed keeping rates unchanged through year-end, should limit upward pressure on US government bond yields at the short to intermediate end of the curve. We prefer 3-5 years bond, as the uncertain US fiscal outlook could keep long end yields elevated.
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Note
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- Investment involves risks. The prices of investment products fluctuate, sometimes dramatically and the worst case may result in loss of your entire investment amount. Past performance is no guide to its future performance.
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