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CIO Insights 4Q24: In a Sweet Spot

The Value in Bitcoin Volatility

Trump 2.0 – Winners & Losers

Credit: Soft-Landing Until Proven Otherw

Credit:Soft-Landing Until Proven Otherwise

The ASEAN Portfolio

CIO Industry Guide: November 2024

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There is a near-term and a medium-term scenario for the US dollar. We make cases for a near-term bull and medium-term bear.

Macro Insights Weekly: Trade War and USD

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<p><span style="font-family: arial, helvetica, sans-serif;"><strong><u><span style="color: #ba372a;">Commentary: Trade war and USD</span><br /><br /></u></strong></span><span style="font-family: arial, helvetica, sans-serif;">There is a near-term and a medium-term scenario for the US dollar. The near-term one came into play vigorously with Donald Trump&rsquo;s election on November 5. Trump trades are on full swing presently, with soaring cryptos, equities, and USD, while the fixed income market has sold off. These trades are pricing in policy support for the cryptos, tax cuts, tariffs, and fiscal expansion. Speculation around the US dollar has been changing since the September Fed meeting, but a decisive return of dollar bulls has materialised only in recent days.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">It&rsquo;s not all about Trump. The markets have begun questioning the Fed&rsquo;s desire and ability to cut rates. Even without Trump&rsquo;s policies, latest data point to (i) an economy growing robustly, tracking 2.5% growth, (ii) moderate inflation dynamic, but still way higher than the Fed&rsquo;s 2% target, and (iii) still-strong labour market, with high employment and positive real wage growth. These point to little urgency for accommodation, giving the Fed the room to wait and see how far it needs to go with rate cuts in the coming months. As expectations coalesce around a higher terminal rate in this cycle, that is fodder for dollar bulls.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">Past the euphoria of Trump trades, however, a more challenging outlook awaits the dollar. Nominal interest rate differentials are not the only factors driving the dollar, medium term views on inflation, government bond issuance, equity markets, and geopolitics are also material. Considering these, <strong>we look at some reasons to be a medium-term dollar bear.<br /><br /></strong></span><span style="font-family: arial, helvetica, sans-serif;">The dollar could come under pressure <strong>if there is an asset market crash</strong> and/or if treasury issuance balloons, reducing the attractiveness of US assets. Under such a scenario, Fed policy rates may have to come down even if the battle against inflation is not fully over, which would be a clear negative for the dollar.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">Additionally, <strong>weaponisation of the dollar</strong> in recent years has given global central bankers and treasuries the motivation to look for alternative assets on the margin, while the private sector has turned increasingly enthusiastic about cryptos and gold. An assertive Trump administration on a variety of matters of geopolitics could add further fuel to this dynamic.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">Finally, the <strong>matter of US twin deficits</strong>. In recent years, US fiscal deficit has been running at 5-6% of GDP. A third of the US treasuries issued to finance these deficits are purchased by foreign buyers, whose supply of dollars comes from the counterpart of US current account deficit, which has been running at 2-3% of GDP lately. Now, if Trump&rsquo;s tariffs succeed in compressing imports, lowering the trade and current account deficits, there will be less dollars for the rest of the world to recycle. Dollar&rsquo;s outlook would be suspect in that scenario, in our view.<br /><br /><br /></span><span style="font-size: 12pt;"><span style="font-family: arial, helvetica, sans-serif;">To read the full report, click here to <strong><a href="/pdfController.page?pdfpath=/content/article/pdf/AIO/112024/241118_insights_weekly.pdf">Download the PDF</a></strong>.<br /><br /></span></span></p>
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<h4 class="name">Taimur Baig, Ph.D.</h4>
<h5 class="designation">Chief Economist - Global</h5>
<a href="mailto:taimurbaig@dbs.com">taimurbaig@dbs.com</a><br /><br /></div>
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<div class="image"><img src="/iwov-resources/aics/images/group_research_staff/Radhika_profile.jpg" alt=" " /></div>
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<h4 class="name">Radhika Rao</h4>
<h5 class="designation">Senior Economist &ndash; Eurozone, India, Indonesia</h5>
<a href="mailto:radhikarao@dbs.com">radhikarao@dbs.com</a></div>
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<br /><br />Subscribe&nbsp;<a href="mailto:groupresc@dbs.com?subject=Subscribe_to_Economics_Macro_Strategy_research_materials">here</a>&nbsp;to receive our economics &amp; macro strategy materials.<br />To unsubscribe, please click&nbsp;<a href="mailto:groupresc@dbs.com?subject=Unsubscribe_to_Economics_Macro_Strategy_research_materials">here</a>.</div>
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Southeast Asia has become attractive to investors lately, but so have other emerging economies. Recognising key headwinds, we still see room for substantial regional prosperity in the decade ahead.

Navigating High Winds: Southeast Asia Outlook 2024 – 34

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<p><span style="font-family: arial, helvetica, sans-serif;">Southeast Asia has grown despite headwinds. &nbsp;Over the last three decades, the region withstood shocks from the Asian financial crisis, the SARS pandemic, a global financial crisis, and the Covid-19 pandemic. And it stayed the course.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">Southeast Asia grew, even as the China miracle siphoned manufacturing investment and jobs away from the region.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">In recent years, Southeast Asia has become more attractive to investors, but so have India, Mexico, and Eastern European countries.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">This is the right moment for Southeast Asia to leverage its newly improved investment climate and well-established, dynamic sectors.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">Much of the world is bracing for lower growth because of higher interest rates, unsustainable government spending levels, trade protectionism, and the potential fallout from the US-China rivalry. But in Southeast Asia, tailwinds should prevail.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">Southeast Asia comprises of six major markets and a handful of smaller ones. While there are important links between markets and opportunities to pursue regional approaches, each country&rsquo;s potential must be addressed individually.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">While many economists focus on FDI as the key barometer for confidence in an economy, we assign substantial weight to domestic investment. Most Southeast Asian countries are seeing robust growth of domestic investment, which underscores local confidence in the region&rsquo;s growth prospects relative to alternatives.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">Effective government action will play a role in catalysing growth. The China model involves the state setting priorities and bending funding toward them. Execution occurs at the city and provincial levels through state-enabled &ldquo;hyper-competition.&rdquo; Entrepreneurism plays a critical role in fully realizing growth potential.<br /><br /></span><span style="font-family: arial, helvetica, sans-serif;">We say, let&rsquo;s unfurl the mainsails.<br /><br /></span><br /><span style="font-size: 12pt;"><span style="font-size: 10pt; font-family: arial, helvetica, sans-serif;">To read the full report, click here to&nbsp;<strong><a href="/pdfController.page?pdfpath=/content/article/pdf/AIO/082024/240801_insights_sea_outlook.pdf">Download the PDF</a></strong>.</span><br /></span></p>
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<h4 class="name"><span style="font-family: arial, helvetica, sans-serif;">Taimur Baig, Ph.D.</span></h4>
<h5 class="designation"><span style="font-family: arial, helvetica, sans-serif;">Chief Economist - Global</span></h5>
<span style="font-family: arial, helvetica, sans-serif;"><a href="mailto:taimurbaig@dbs.com">taimurbaig@dbs.com</a></span></div>
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<div class="image"><span style="font-family: arial, helvetica, sans-serif;"><img src="/iwov-resources/aics/images/group_research_staff/Radhika_profile.jpg" alt=" " /></span></div>
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<h4 class="name"><span style="font-family: arial, helvetica, sans-serif;">Radhika Rao</span></h4>
<h5 class="designation"><span style="font-family: arial, helvetica, sans-serif;">Senior Economist &ndash; Eurozone, India, Indonesia</span></h5>
<span style="font-family: arial, helvetica, sans-serif;"><a href="mailto:radhikarao@dbs.com">radhikarao@dbs.com</a></span></div>
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<h4 class="name"><span style="font-family: arial, helvetica, sans-serif;">Ma Tieying, CFA</span></h4>
<h5 class="designation"><span style="font-family: arial, helvetica, sans-serif;">Senior Economist - Japan, South Korea, &amp; Taiwan&nbsp;</span></h5>
<span style="font-family: arial, helvetica, sans-serif;"><a href="mailto:matieying@dbs.com">matieying@dbs.com</a></span></div>
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<h4 class="name"><span style="font-family: arial, helvetica, sans-serif;">Chua Han Teng, CFA</span></h4>
<h5 class="designation"><span style="font-family: arial, helvetica, sans-serif;">Economist - Asean</span></h5>
<span style="font-family: arial, helvetica, sans-serif;"><a href="mailto:hantengchua@dbs.com">hantengchua@dbs.com</a></span></div>
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<br /><br />Subscribe&nbsp;<a href="mailto:groupresc@dbs.com?subject=Subscribe_to_Economics_Macro_Strategy_research_materials">here</a>&nbsp;to receive our economics &amp; macro strategy materials.<br />To unsubscribe, please click&nbsp;<a href="mailto:groupresc@dbs.com?subject=Unsubscribe_to_Economics_Macro_Strategy_research_materials">here</a>.</div>
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US, Europe, Japan

We take a look at the market frenzy across various crypto assets and assess their outlook in light of possible regulatory changes ahead.

Digital Assets Update 4Q24: Crypto frenzy

US: Fed meeting a non-event 

With Donald Trump&rsquo;s election as the 47th president of the US and the Senate shifting to a Republican majority, a few years of intensifying trade and tech war, and deficit spending lie ahead.

Trump win and the global macro narrative

Given the scope for significant regulatory change in the US following elections, crypto markets should see higher volatility into Nov as sentiment swings with election odds.

Crypto Digest: US politics’ influence on sentiment

Cryptocurrencies offer a new paradigm of decentralized, logic-driven money. Adoption is increasing, given its potential for new applications, but much remains uncertain.

Digital currencies: Perspectives and potential

With the US Fed kickstarting its rate cut cycle with a strong 50bp cut, the focus shifts to Japan and the Eurozone.

Japan & Eurozone: On their own beat

Fed pivots to supporting the labour market 

Volatile global markets and supply shocks have weighed on crypto prices, but ETH ETF outflows are easing.

Crypto Digest: Outflows stabilizing across Ether ETFs

https://www.dbs.com.sg/treasures/aics/archive/index.page?geography=asia-ex-jp

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Asia

Singapore&rsquo;s economic growth has gained momentum in 2H24.

Singapore: Solid growth but some uncertainties

Hong Kong's mixed outlook sees lower rates boosting lending, robust exports, but retail and property face headwinds amid geopolitical tensions, projected 2.5% GDP growth.

Hong Kong 2025 macro outlook: A cloudy weather

Research Library

Asset Risks: Rising FX risk score 

Consumption sentiment saw signs of stabilization on stimulus measures.

China: Signs of stabilisation on decisive stimulus

China plans robust stimulus to offset risks from property market routs, trade tensions, and weak domestic demand.

China 2025 Macro outlook: Stimulus to offset weak demand and trade war

CNY6trn debt quota is added for debt swap program in the next three years.

China: NPC unveils new stimulus; keeps some powder dry

At the half-way mark through the year, we take stock of the fiscal run-rate

India: On-track fiscal consolidation, capex catch-up

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CIO Insights 4Q24: In a Sweet Spot

The Value in Bitcoin Volatility

Trump 2.0 – Winners & Losers

Credit: Soft-Landing Until Proven Otherw

The ASEAN Portfolio

CIO Industry Guide: November 2024

US, Europe, Japan

Macro Insights Weekly: Trade War and USD

Navigating High Winds: Southeast Asia Outlook 2024 – 34

Digital Assets Update 4Q24: Crypto frenzy

US: Fed meeting a non-event

Trump win and the global macro narrative

Crypto Digest: US politics’ influence on sentiment

Digital currencies: Perspectives and potential

Japan & Eurozone: On their own beat

Asia

Macro Insights Weekly: Trade War and USD

Navigating High Winds: Southeast Asia Outlook 2024 – 34

Singapore: Solid growth but some uncertainties

Hong Kong 2025 macro outlook: A cloudy weather

Research Library

Asset Risks: Rising FX risk score

China: Signs of stabilisation on decisive stimulus

China 2025 Macro outlook: Stimulus to offset weak demand and trade war

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