Any Fed Tapering on the horizon?

Published on February, 8th 2021 Market and research
Flageollet

Stéphanie BIGOU

Portfolio Manager

Written on 8th February 2021 by Seeyond

Let’s look at the facts:

  • The Chinese credit impulse (*) is a great indicator to forecast medium-term global economic growth.
  • Chinese financial authorities sharply increased credit in recent months to cope with both the US Trade War and Covid-19 repercussions.
  • Although we might have seen a peak, we believe its effect will continue to fuel global growth throughout 2021.
  • Given the historical correlation between the credit impulse and USD, we believe USD will depreciate further.

What do we think?

  • Due to high levels of short USD positioning and uncertainties around the sanitary crisis, we could see higher FX volatility but doubt that the USD would durably appreciate. This is positive for both Credit and Equities.

* The Chinese credit impulse measures the change in the aggregate credit growth rate as a percentage of the GDP.

USD Dollar deprecation

Source: Bloomberg, Seeyond, December 2007 to December 2020

This article has been provided for information purposes only to professional clients as defined in the MiFID Directive. It must not be used for retail investors. The provision of this material or reference to specific sectors or markets in his article does not constitute investment advice or a recommendation or an offer to buy or sell any security. Investors should consider the investment objectives, risks, and expenses of any investment carefully before investing. Views expressed in this article as of the date indicated are subject to change and there can be no assurance that developments will transpire as may be forecasted in this article.

This article has been provided for information purposes only to professional clients as defined in the MiFID Directive. It must not be used for retail investors. The provision of this material or reference to specific sectors or markets in his article does not constitute investment advice or a recommendation or an offer to buy or sell any security. Investors should consider the investment objectives, risks, and expenses of any investment carefully before investing. Views expressed in this article as of the date indicated are subject to change and there can be no assurance that developments will transpire as may be forecasted in this article.