"I'd like to, but I can't". We could easily attribute this thought to the Federal Reserve, but also to the Bank of England or the Australian Central Bank. With inflation hardly compatible with immediate easing, we can console ourselves with the thought that it's only a matter of time before the first rate cuts take place.

In the meantime, only the Swiss National Bank has clearly decided to lower its key rates, for the second time this year. We'll come back to the reasons behind this move in our focus on currencies. However, the following chart shows the remarkable dissonance between the SNB on the one hand, and the stance of other central banks which are on a plateau, waiting to adopt a more accommodating stance.

Source: Bloomberg Opinion

Why is this?

It may come as a surprise, but fears of a possible recession have not gone away. This is evidenced by a composite indicator published by Standard & Poor's which takes into account not only the yield curve, but also leading indicators of the US economy and credit conditions.

Although the probability of a recession within 12 months has fallen back below 50%, it remains relatively high given the current mood on the stock markets. The ratio between the S&P 500 Equal Weight Index and the S&P 500 is close to its 2008 lows. The underperformance that has been in place since 2015 could therefore ease momentarily, either thanks to a general rebound in the components of the US index, or a temporary pause in the magnificent 7s.

Source : Bloomberg