Gavekal Capital: 5 Consequences Of A Stronger Dollar

Friday, September 5, 2014

5 Consequences Of A Stronger Dollar

The real trade-weighted USD index (major countries) quietly made a 64-month high at the end of August.

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If this marks the beginning of a structural strengthening trend for the dollar than it is plausible that the following consequences could follow:

1 - Cyclical stocks should continue to underperform 

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2 - The long end of the yield curve should flatten further

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3 - Inflation expectations should fall further

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4 - And actual inflation should drop

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5 - Commodity prices should feel a deflationary drag

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