Goldman Sachs - Developing Markets to Gain on Dollar Peak

According to Goldman Sachs Group analysts, the major countries' stocks, currencies, and bonds will reap the benefits of the US dollar, which is currently at its potential peak.

June 03, 2022 - 11:07 AM 291 views

Goldman Sachs  - Developing Markets to Gain on Dollar Peak

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According to Goldman Sachs Group analysts, the major countries' stocks, currencies, and bonds will reap the benefits of the US dollar, which is currently at its potential peak.

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According to Caesar Maasry and Jolene Zhong, a nearly 3% drop in a key greenback index from a high point in mid-May signals a resurgence in developing markets, which tend to outperform the rest of the globe in the months following a cyclical dollar peak.

Investors are returning to emerging economies in other ways. On Tuesday and Wednesday, a three-times leveraged China stock ETF experienced record trading, over six times the daily norm. The Indonesian rupiah gained 0.6 percent this week, reaching a one-month high, while the South Korean won and offshore yuan both climbed 1.3 percent.

Of course, science isn't flawless. According to Goldman, emerging-market growth data typically "bottoms" around a peak in the dollar, and equities values often trade at bigger discounts to the S&P 500. Dollar peaks are often associated with recessions, according to the analysts.

    Goldman also observes that the Yen currency is exceeding and the United       States of America (USA) recession threats are boosted.

 

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