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Investor sentiment continues to be largely influenced by the policy decisions of leading central banks, including the Fed, the ECB, the BoE, the BoJ, and the BoC.
In the United States, Europe, and the United Kingdom, sentiment declined sharply after both the Fed and the ECB reiterated that they were in no hurry to cut interest rates, which also negatively affected sentiment among Global Developed and Global ex-US Market investors.
Investor sentiment changed only marginally last week. Asia ex-Japan and Global Emerging markets decoupled from China, becoming less bearish. However, Chinese investors remain bearish ahead of the National People’s Congress this week.
Investor sentiment was little changed last week ahead of key inflation data this week. Globally (except in China), how central bankers ‘feel’ about inflation continues to rent vast amounts of space in investors’ head.
Investor sentiment ended little changed from the prior week across all the markets we follow. Global Developed markets ex-US investors remained bullish, followed by a strongly positive sentiment among Japanese and Australian investors.
Investor sentiment ended mixed last week, rising in the US, Europe, Japan, Global Developed, and Global Developed ex-US markets, but declining in Asia ex-Japan, Australia, Global Emerging Markets, the UK, and China. Investors in the latter are becoming increasingly bearish in the face of a silent response from the authorities. Sentiment in the major markets of the US, Europe, and Japan continues to be driven by the pivot industrial complex, and despite last week’s push-back from central bankers, investors remain convinced that the future direction of interest rates has decidedly pivoted to the downside now. #NotIfButWhen.
Sentiment declined globally in the past two weeks as investors face an increasingly negative geopolitical world that really burns their toast. Sentiment had risen since November last year on the belief that both the Fed and the ECB would start to cut interest rates as early as this March. The mood reversal of the past two weeks indicates that most of them now acknowledge that this was less of theory and more of a guess. They have now set the May FOMC meeting as the absolute bar-is-closing, last call time limit for a rate cut. Global Developed ex-US investors have retained their bullish hopes, despite weak economic data out of Germany in the prior week. Their thinking seems to be that if the US can avoid a recession, so can the rest of the (developed) world, even though that is 100 percent not grounded in reality as most of the time in the past 20 years, the opposite was true.
Investor sentiment softened slightly last week but remains mostly positive. Sentiment was bullish in five of the ten markets we follow (Asia ex-Japan, Global Developed Markets ex-US, Global Emerging Markets, the UK, and (briefly?), with the continued hope for a global (ex-Japan) pivot to a more dovish monetary policy, by major central banks. In contrast, sentiment among Chinese investors retreated from last week’s bullish feeling, returning to just positive this week, after further signs of deflation were met by a lack of stimulus response from the authorities, like an iPhone that’s (temporarily?) lost communication with its cloud.
Investor sentiment held on to a mostly bullish feeling over the holiday period. Four (Asia ex-Japan, Global Developed Markets ex-US, Global Emerging Markets, and the UK) of the five markets that ended 2023 with a bullish sentiment, started 2024 feeling the same way. On Friday last week, they were joined by a fifth market, as Chinese investors (substituting for European investors, three weeks ago), raised their hopes for the fourth time in the last six months, for that all elusive economic stimulus package from the authorities.
Investor sentiment continued to rise last week, reaching bullish levels in six of the ten markets we follow, with a seventh, Global developed markets, being (temporarily?) held back by stalling sentiment in the US which ended the week shy of bullish. For those seven markets, sentiment ended the year as it started, on a bullish note. UK investors were by far the most bullish last week, convinced nothing can stop them now. In the US, the recovery in sentiment paused last week despite a rising market, as investors began to question if they should indeed become bullish so fast, or at least, if they are being bullish for the right reasons.
Investor sentiment improved further last week in all markets we track, except China, where sentiment declined (very) rapidly from bullish to neutral. This week is theoretically a big one for markets, with monetary policy decisions across several major central banks (Fed, ECB, and BoE). In practice, however, investors are almost certain of a ‘no-change’ decision and have already priced that in (and maybe a little extra) during the November rallies. Investors, who increasingly believe they are on the ‘Good’ list this year, will focus on the language of the press releases, as well as next week’s meeting minutes, , looking for clues on the timing of the first (of many?) rate cuts of 2024.
Investor sentiment rose for the fifth consecutive week after bottoming out in late October/early November, ending neutral in all markets, except in the UK where it turned bullish for the first time since June, and in China where it remained bullish. Last week marked a turning point for most markets (except Japan and China) as uncertainty about the direction of monetary policy, which had yet to abdicate its leadership role in dictating sentiment for the past three years, declined in response to guidance from central bankers and improved transparency and predictability on the macro side.