Morgan Stanley on gold (why it went up last week & what it means for EUR)


A Friday note from Morgan Stanley, with a preamble on ‘2018 goes into reverse’

  • markets are moving in reverse of 2018
  • Growth divergence due to US outperformance may turn into growth synchronisation as US growth falls back
  • The Fed will have to ease relative to previous expectations, suggesting US real yields coming off which will work in favour of higher-yielding EM assets
  • Investors seem to have lost the appetite to invest into USD, but seem to struggle to find alternative currencies. This is why gold has hit a 7-month high. 
  • Often, gold advances have led other currencies – including the EUR – against the USD

(ps I’m reading this with a wee bit of scepticism, as 2019 was only 2 trading days old when MS wrote it!)


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