Has Anything Really Changed?

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Last week was an interesting one for major asset classes, with some moving in line with expectations and others moving against the grain.

Of note were the jitters seen in equity markets on Thursday, as fears of much higher U.S. Capital Gains Taxes saw some downside. But apart from some short-term scares, it’s important to keep in mind that nothing has really changed.

On the tax fears, it was largely unwarranted if you think about the details under the hood. Firstly, impact from hikes in CGT are usually short-lived according to research done by Goldman Sachs. Secondly, proposing an almost doubling of the rate is one thing, but getting it approved and passed into law is quite another.

Apart from equities, the other big head scratcher has once again been US10Y, which have kept struggling to push higher despite the inflation and growth picture continuing to grow from strength-to-strength. Hence, it should become more and more difficult for yields to stay low in the coming weeks.

In the week ahead there are a couple of events we are watching for possible opportunities, such as Wednesday’s FOMC meeting, Thursday’s Q1 GDP and of course some big names reporting Q1 earnings this week.

We’ll go through all of that in this week’s week ahead video.

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Highlights of the video:

00:27​ – Current Baseline

05:27​ – Baseline expectations for the upcoming week

14:23​ – Sentiment Shifts & Trade Plan

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