Sumary of CORRECTED-GRAPHIC-Warning signs for global recovery as Delta dims outlook:
- Coinciding with a resurgence in the Delta variant of COVID-19, markets may be sending alarm signals about the global economic outlook, Deutsche Bank chief FX strategist George Saravelos told clients.
- This is the opposite of what one would expect if the environment was genuinely inflationary and it shows the global economy has a very low speed limit,” Saravelos wrote.
- 1/ DOLLAR REFUGEData on hedge funds’ weekly currency positioning is the closest available real-time indicator of investors’ thinking about the $6.6 trillion a day foreign exchange markets.
- With the dollar at its highest since end-March, latest Commodity Futures Trading Commission data shows net long positions on the dollar against a basket of major currencies is the biggest since March 2020. Positioning had dropped to a net short bet as recently as early June.
- Many clients of Goldman Sachs believe the cyclical rotation was a short-lived phenomenon driven by recovery from an unusual recession, the bank said.
- Stephen Jen, who runs hedge fund Eurizon SLJ Capital, noted that because China’s business cycle was ahead of that of the United States or Europe, weaker data there is filtering through to investor sentiment in the West.