Global Macro/Markets Notes: Week #30 (Jul 24-30, 2022)

Updated: 4 hours ago


Insights, Perspectives & Trends

The Debate Goes On...


Macro/Markets Overview

FX | Rates | Credit

Equities | Alternatives

The Debate Goes On…

Welcome to another edition of our “Global Macro/Markets Notes”. As we look across currencies, bonds, equities, and commodities, we find mixed messages.

A #bearmarketrally is probably a good explanation for the results of equity markets last week. Despite the feelings of fund managers, surveyed by BofA, the facts remain that we are still in an environment of monetary tightening by the Fed and earnings revision by analysts.

Bond market participants probably smelled blood in the water, as investor ran for the safety of US treasuries.

Keep reading our notes to find out what are we thinking about all of this. I hope you enjoy this report and please let us know if you have any questions, concerns or comments that will help in the future versions of our publications.

Warm regards, LeoC.


Insights, Perspectives & Trends

The debate is on… equity and bond market rallied on the week. So, who is right? The jury still out.

If you blinked you probably missed, but don't worry, if you have a time horizon longer than a few years, it will not matter if you jumped onboard now. Said that, we believe the market action last week was not a definitive sign that we are entering a new bull market. As such, there is a possibility that you will get another chance, but don't aim to pick a bottom because you could miss the journey.

Led by traditionally bull market segments, such as small caps and tech stocks, US equities advanced. The S&P500 rose 2.5% on the week, is now 4.7% higher on the month and has recovered some lost ground on the year, but still down 16.8% in 2022. Despite plenty of bad news priced in, we don't believe this is an "all clear" signal and we are expecting further volatility in the coming weeks and months.

In prior publications, we have mentioned the obvious: after a bear market there is always a bull market, but #bearmarketrally should not be interpreted as a signal to go all in or hit the gas pedal hard. This could well be the fifth #failed attempt this year by US equites (figure 1) to change market direction; that debate is now going on…