Weekly Market Recap
Week in review
- 21/05 – KR – May imports/ exports
- 23/05 – Global – May flash PMIs
Thought of the week
Even though the re-escalated trade tension backdrop seems to be reverting back to 2018, there is one key difference that implies asset return outcome could be different. In particular, back in 2018, the Fed was in a rate normalization mode. In comparison, the Fed is now content with the current level of interest rates and may even ease monetary policy further should trade war escalates further and threatens U.S. economic growth. This continuous dovish pivot by the Fed gives more flexibility to Asian central banks who can now focus more on domestic concerns as the primary driver of monetary policy, especially as inflation remains subdued. In the past few weeks, we witnessed signs of a dovish turn within ASEAN, with Malaysia and Philippines central banks both opting for rate cuts. Willingness by central banks to keep monetary policy loose should prompt investors to continue to look for yields. Fixed income, such as Asian fixed income and corporate debt, continue to provide a greater risk-return.
Chart of the week