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Day Hagan/Ned Davis Research Smart Sector® with Catastrophic Stop strategy, model and allocations update.
The NDR Fixed Income Allocation Strategy, Positioning Update
Dynamic Allocation Strategy, indicators, weightings update
Day Hagan/Ned Davis Research Smart Sector® with Catastrophic Stop strategy, model and allocations update.
The NDR Fixed Income Allocation Strategy, Positioning Update
Dynamic Allocation Strategy, indicators, weightings update
Our FX models for USD against EUR, GBP, AUD, NZD and NOK, which were largely USD positive last year, reversed in January. In particular, our reversion models are suggesting some strength in these currencies against USD in the near term. Nevertheless, the continued outperformance of the US economy, alongside sluggish growth in Europe, suggests that any USD reversal will not be sustained.
Ah! The start of the new year. The new calendar offers so much possibility! A moment of change that seems to come just as we have spent time following traditions and celebrating holidays that have managed to survive. It’s a comforting reminder that while “progress” is relentless, amid the seasonal ebb and flow there are still some things we can rely on. A missed Fed inflation and rates projection, a TFTD that is once again arriving after the end of the year (mea culpa encore), and… a return to the wisdom of Whitney Houston?
Day Hagan/Ned Davis Research Smart Sector® with Catastrophic Stop strategy, model and allocations update.
The NDR Fixed Income Allocation Strategy, Positioning Update
Dynamic Allocation Strategy, indicators, weightings update
The sector model maintained mixed leadership this month. Entering December, Consumer Discretionary, Financials, and Utilities are above benchmark weight. Communication Services improved to marketweight. Information Technology, Real Estate, Industrials, Materials, Energy, Consumer Staples, and Health Care are below benchmark weight.
The NDR Fixed Income Allocation Strategy, Positioning Update
Dynamic Allocation Strategy, indicators, weightings update
Day Hagan/Ned Davis Research Smart Sector® with Catastrophic Stop strategy, model and allocations update.
The NDR Fixed Income Allocation Strategy, Positioning Update
Dynamic Allocation Strategy, indicators, weightings update
The strong USD bias worked well for our FX models last month, with our dynamic hedge adding over 1% outperformance for EURUSD and GBPUSD, and over 3% for USDJPY. We note, however, that our models have now moved to neutral for the USD against the EUR and GBP, though still look for higher USDJPY. Reducing FX risk may well be sensible given the closeness of the US Presidential election, and doubts about the accuracy of polls. Though, as we note overleaf, late momentum now marginally favours Harris.
A strong start from Currency Compass last month, where we called for a 50bp Fed rate cut camp but noting our currency models point to EURUSD and GBPUSD weakness, so any bounce is a good opportunity to add EUR and GBP hedges. Indeed it was, with EURUSD hitting 1.12 and GBPUSD 1.34 before falling back. Stronger US data, in particular the employment report, helped cement this view, the chart below illustrates how recent US data has pushed up the Atlanta Fed Q3 GDPNow forecast from 2% to above 3%.
Day Hagan/Ned Davis Research Smart Sector® with Catastrophic Stop strategy, model and allocations update.
