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!)