G10 Growth: Fiscal policy to the rescue? - TDS
|Research Team at TDS suggests that the post-crisis toolkit has mainly consisted of monetary policy and with many countries still working through pockets of excess capacity, market participants have actively discussed a possible rotation to fiscal policy, especially now in the US.
Key Quotes
“The ’shock’ US election result has accelerated this debate.”
“Countries that use fiscal policy are likely to see stronger currencies and steeper curves. For China, we look for continued fiscal support to offset structural rebalancing while higher commodity prices are unlikely to make a material change in fiscal numbers in EMs.”
“Market: To capture this theme, we think this more activist fiscal policy favors the USD against the low-yielders (EUR, JPY and CHF) and a stronger push towards a reflationary environment also favors short CADNOK. Reflation favors short CADNOK. GE 5s30s steepeners should give way to US 5s30s flatteners and JPY 10s30s steepeners.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.