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Laxman Pai, Opalesque Asia: CTAs performed well in August as the drop in sovereign yields continued to boost the heavily long bond exposure, Lyxor said in its weekly brief.
Conversely, Macro funds underperformed due to their short bond and long equity exposure. Long biased strategies on equities also gave back some of their earlier gains. The other strategies were resilient, it said.
Jolts in the U.S.-China trade standoff and monetary policies continued to dominate market trends in August.
Now, according to Lyxor, investors have three pressing questions in mind: i) Will trade tariffs and a weakening manufacturing sector bring about a recession?, ii) Do central banks have enough firepower to cushion the impact?, iii) When will President Trump consider de-escalating the trade war ahead of the U.S. elections?
Brexit remains the dominant UK equities driver
UK Prime Minister Johnson has started to negotiate an alternate withdrawal agreement with Europe, with little success so far, as expected.
The standoff between Parliament - a majority of which opposed to a disorderly Brexit - and the government which is willing to accept this outcome is likely to further intensify.
The opposition and some Tories are discussing a no-confidence vote, which seems achievable by the numbers. However, they will need to agree on the timing, the course of action after the vote (referendum or general elections?), and on who will lead the coalition.
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