While global investors await the Federal Reserve's decision on Interest Rates, the US bond yields have already reduced from 4.2% to 3.6% in the last one and a half months. This is crucial as the US10-year bond three-year seasonality cycle ended in July 2024. The first 45 days of the new cycle align with the July 2007 cycle.
Similar to this, the dollar index also stands at a crucial stage as it is about to enter the last leg of its current three-year cycle in the next 10-15 days. The last leg lasts about 10-12 months but the trends are the widest in range resulting in the best and worst-case difference to be big. It would impact emerging currencies, especially with Yen as it continues with rate hikes.
In addition to this, global equities are in the last leg of three-year cycles with 120-200 trading days left depending on the region. Given the current leg mostly has base and best case above from current levels it is crucial to look at short volatility spikes in reference to this. This would exclude the seasonally weak March quarter.
The continuity and stability in these and other asset cycles are crucial as it would be coming into a high volatility period. The focus would be on GDP growth as well because in the next two quarters the new three-year cycle with no base impact of lockdown starts.
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