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Global Risk Assets Gain Foothold In Recent Rally - Which Trades Stand Out?

Oil prices have recovered after Doha with some help from a production strike in Kuwait.

Fed has shouldered the global growth mandate.

EMFX and risk is in demand, carry trade pairs and high yield finds buyers.

Although the failed Doha meeting led to some people suggesting an effective break of the OPEC cartel, the USD declined while oil recovered from earlier losses. A strike by oil workers in Kuwait nearly halved crude production from the OPEC member had a lot to do with the price action, overshadowing bearish sentiment following Sunday's failure by producers to agree to freeze output levels.

But at the end of the day, the Russell 2000 has closed above its 200DMA and the Dow Jones has reached its highest level since July, suggesting that the 'Fed put' works on the US side too, supported by further gains of US high yield markets, suggesting that the risk premium is in decline. In the current environment of more stable global risk appetite, high-beta currencies are likely to remain bid, particularly given how far valuations overshot to the downside in many currencies.

Fed now considering the evolution of financial conditions next to US inflation and employment when conducting its monetary policy has created a more international mandate for the US central bank. It seems the Fed stands ready to run a safety net not only for the economy and US capital markets, but also for the global economy and global capital markets, and here it is especially watching potentially disruptive capital flows.

The IMF's global stability report highlighting the increasing interdependence of DM and EM economies...