Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Chief Macro Strategist
Summary: Polls and betting odds are shifting back slightly in Trump’s favour. This week, we focus on what the US bond market is telling us about the US economy, as inflation and the economy are top issues for voters.
Polls have tightened a bit again, and thus back in Trump’s favour as we can see from the shift in the polling and betting odds. Stock markets saw a continued recovery in sentiment after the brief wipeout in early August. Indeed, ahead of this week’s Labor Day holiday on Monday in the US, the US S&P 500 Index posted a record high weekly closing level. Financials, industrials and materials posted the strongest week last week, while info-tech was weighed down a bit by Nvidia’s somewhat disappointing outlook, at least relative to stratospheric expectations.
The earnings calendar is quiet this week outside of the chip and software giant Broadcom, which reports on Thursday. There is a strong AI angle to that company’s potential outlook, so it bears watching for the general status of the AI theme.
With polls in closer balance, it is impossible to associate moves in specific assets with the anticipated election outcome, but the underlying direction of the economy is critical to track as we head toward November 5, as we discuss in the Chart of the Week below. A weak economy is historically associated with voters rejecting the party in power.
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)