March 2024 comment

Another solid month of gains with Currencies and Equity Indices racing ahead of the pack. Our US dollar longs were cheered on by growing economic divergence between the US and a slower Europe, with the Euro curve overtaking the US with regards to the pricing of the first rate cut. Central banks lined up for their March meetings, with BOE, ECB and Federal Reserve holding steady whilst the Swiss National Bank jumped the gun with a surprise cut. In the opposite track, the Bank of Japan ended its negative rates era with a dovish hike that was fully baked in the price – USDJPY duly regained its upward march and approached past direct intervention levels. We keep our short currency long equities trade in Japan, albeit in lighter weight division.

The dynamic also fed into broader equity index performance, which remained on the front foot and supported our long exposure – we observed pockets of internal rotation starting to gain traction. Our usual Agricultural runners – Cocoa and Coffee – kept their marathon going whilst Metals were more of a mixed bag – our long Gold powering into new all-time highs whilst more industrial shorts - Aluminum, Palladium, Silver – wrong footed net performance for the class.