Saxobank CIO: Credit Cycle Has Peaked, Gold Will Be Best-Performing Commodity
- Real rates are finally coming off in the US
- More and more pundits see inflation ticking higher
- A summer of European growth – and hell afterwards
- ECB's balance sheet as % of GDP little changed despite QE
- The credit cycle has clearly peaked
The overall position:
- US, German and EU core government bonds will be 100 bps higher by and in Q4 before making its final new low in H12016.
- US 10-year yield will trade above 3.0% and bunds above 1.25%
- Energy: WTI crude will hit US $70-80/barrel, setting up excellent energy returns.
- US dollar will weaken to EUR1.18/1.20 before retest of lows and then start multi-year weakness.
And, just to remind you… when the Fed hikes it’s a margin call. There is no basis in the bank's mandate to do so, but its need to normalise policy will have data support over the summer as the CESI (Citigroup Economic Surprise Index) will mean revert.
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