Bond Outlook October 24th

From Euromoney’s AsiaHedge Conference in Hong Kong, the USD and the US economy look very weak. Investors here plough on, while in the West “wait and see” rules.

Bond Outlook [by bridport & cie, October 24^th 2007]

Just as last week we had to present both sides of the inflation vs. deflation argument, and can only wait for a definitive answer, so this week the sense of “wait and see” continues. Our tentative answers to several key questions are in italics:

Will the Fed cut rates next week? If it does, is the implied USD weakness priced in or will the USD fall still further? Yes, but we still believe the bottom is not yet in sight.