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May 10 - 02:55 PM

SocGen: The Bar for US Exceptionalism to Fade Relative to Expectations, is Low

By eFXdata  —  May 10 - 01:30 PM


Societe Generale discusses the current state of US economic exceptionalism relative to global expectations, noting a decline in the US economic surprise index and its potential implications for currency markets.

Key Points:

  • US Economic Surprises: The Bloomberg US economic surprise index has been falling, indicating that recent data has not lived up to high expectations, contrasting with a more positive performance in Europe.
  • Yield Differentials: The differential between US and German 10-year yields may have reached its peak, suggesting a potential shift in the relative attractiveness of US versus Eurozone assets.
  • Global Growth Perspectives: While the US has enjoyed a position of economic strength, other regions are showing signs of improvement. Japan is making efforts to exit deflation and maintain higher interest rates, and despite subdued forecasts, China’s expected GDP growth of 4.8% this year may be conservative.


SocGen argues that while the concept of US exceptionalism may not yet be over, the evidence suggests it could be diminishing relative to global expectations. The firm maintains a cautious stance on predicting a significant weakening of the USD, noting that while the dollar may not continue to strengthen universally, the shift might not be dramatic enough to challenge the currency's overall strong position. This evolving dynamic underscores a lower threshold for US exceptionalism to fade, which could recalibrate global currency and economic expectations in the near future.

Société Générale Research/Market Commentary


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