Friday Investment Talk: USD Interest Rates, Currencies, China and Vietnam

This week we review how US real negative interest rates have pressured the USD while giving strength to the Euro and some emerging market currencies and sovereign debt. The Ruble has not benefitted from low US interest rates as oil supplies remain high amid the COVID demand destruction pandemic.

Certain economies in southeast Asia present better growth prospects. Vietnamese exports are rebounding faster than Chinese, for instance, as the country has become a proxy for the revival of China.

Momentum in silver is noted again as it shines in the afterglow of gold gains. Oil Prices continue to put pressure on Oil related currencies and companies. This maybe what is supporting an outperformance in clean energy issues vs traditional energy companies.

Weakness in the USD maybe have been putting a bid under European equities in July. Will that continue though into the weakest months of the year? Meanwhile, FAANG stocks continue to outperform with online grocery services pulling Amazon’s earnings into the spotlight.

Finally, the market shows no real sell signals yet, and the historically seasonally strong summer trade during US election years has kept the ball rolling through July.