The end of 2018 saw expectations shift meaningfully in certain markets, and then pause. It also saw trends accelerate, then pause. For most of us, the pauses were welcome, because the shifts were related to broad market plans. Unfortunately, 2019 has seen a resumption in the directionality away from prior trends. Trends that had previously been accelerating have resumed as well. These are not universally negative movements, but are meaningful.


US dollar bond price sentiment resumed its positive path. This is a resumption of a trend that took hold in 2018. Other denominations experienced similar positive movements, but did not see those trends resume. Yen bonds saw expectation differential drop sharply in the recent survey period, while euro bond sentiment also weakened. For euro bonds, their 2018 upward trend was not only the weakest, but also rose to a point furthest from its four-year high, which is to say sentiment is weak.


Sentiment differential also fell during the period. This was the unwelcome trend shift mentioned taking further hold. US sentiment differential fell the most, followed by UK and then the euro-zone. While sentiment for Japan equities also declined, sentiment towards the rest of Asia did the opposite. Positive sentiment towards US equities is its lowest since February 2018, and euro-zone sentiment is the lowest in two years.


Within currencies, the trend we have highlighted over the last couple of months, the crossing of cumulative positive and negative – in favour of the negative, which was many, many months in the making – has accelerated in the most recent survey period. Expectations for dollar strength are at a long-term low, while expectations for its decline are the opposite.