The stock markets have recovered nicely in recent months, but is there a risk of a flight to cash later in the summer?
Here is their view, courtesy of eFXdata:
Nomura Research flags a scope for a deja vu for US stocks price action similar to 2016 when risky assets melted up in July before a reverse of trend in August.
“We see the need to watch out for the risk that market trends from August onward prior to the last US presidential election (2016) may be reenacted in the cross-asset market. Specifically, in 2016 risk assets and safe-haven assets were all bought across the board up through July, but from late August were all sold across the board,” Nomura notes.
“We therefore think it is hard to rule out a flight to cash (across-the-board selloff of risk-assets and safe-haven assets) this year again owing to uncertainties about the election result and subsequent events,” Nomura adds.
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