HSBC strategists said that the further escalation of the war in Iran has not prompted them to change their bullish views on risky assets; they believe that the second-quarter earnings season is the more important driver. The team led by Max Kettner said that the “market's consistent high expectations for the US” narrative did not take into account the fact that quarterly earnings growth expectations “are still quite low.” The strategists said that their sentiment and position framework have yet to send any signals to sell, adding that systemic investors' positions “are still largely neutral.” They also said that the unexpected decline in US CPI in June may be an early sign that the US exceptionalism is beginning to fade. This may initially be a “welcome booster” for risky assets, but if US Treasury yields decline and the yield curve becomes steep again, it may turn into a painful transaction.

HSBC strategists said that the further escalation of the war in Iran has not prompted them to change their bullish views on risky assets; they believe that the second-quarter earnings season is the more important driver. The team led by Max Kettner said that the “market's consistent high expectations for the US” narrative did not take into account the fact that quarterly earnings growth expectations “are still quite low.” The strategists said that their sentiment and position framework have yet to send any signals to sell, adding that systemic investors' positions “are still largely neutral.” They also said that the unexpected decline in US CPI in June may be an early sign that the US exceptionalism is beginning to fade. This may initially be a “welcome booster” for risky assets, but if US Treasury yields decline and the yield curve becomes steep again, it may turn into a painful transaction.