Global Fixed Income & Currency Strategy

October 01, 2021

The Fed’s hawkishness could turn out to be a policy mistake. The labor market is a long way from maximum employment, inflation expectations are well-anchored, wage pressures are muted, fiscal policy has tightened, and China is unleashing a deflationary impulse on the world. Investors should avoid becoming more bearish on Treasuries as yields move higher.

In currencies, the near-term outlook for the U.S. dollar is bullish. It will take a dovish pivot by the Fed and more aggressive reflationary policies from China to turn the dollar down. Finally, we look at NOK/SEK as a beneficiary of rising oil prices.