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Macro Update: After the rally
Aurelie Barthere
Key Takeaways
7 min read
  • Regional growth and yield differentials continue to favor the US vs the rest of the world…
  • …although an additional Fed rate hike is being priced out.
  • The ongoing US yield curve steepening is not an imminent sign of recession (according to history).
  • Equity markets are likely to surf the relief from geopolitical event pricing in the short-term. In the long term, we note that cyclical sectors have started to underperform, which could be flagging a slowdown in global growth.
  • Crypto is “living a life of its own” with our indicators risk-on since September 29, 2023, in a seemingly technical rally.

In this note, we will go through regional growth divergences and how these impact traditional assets such as currencies and equities. We will analyze central banks’ likely next steps, and review cryptocurrency tactical indicators after the weekend’s price pump.

China and global demand

Chinese economic data mostly beat economists’ expectations for September: retail sales came at 5.5% YoY (vs 4.9% YoY expected, and up from 4.6% YoY in August). This and earlier data from the Golden Week paint a picture of a recovering consumption, especially for domestic services.

However, Mainland and Hong Kong equity markets were among the worst regional equity performers week-on-week, down by close to 4% (the week the data was released).