We don’t think the relatively unusual rotations within the US stock market are a sign that the relentless march of US equities, and especially the big tech sectors leading the way, is nearly at an end. At face value, last week was a fairly uneventful one …
18th August 2025
We still think the Japanese yen will stage a sustained rally against the US dollar. The yen got a bit of a boost earlier today from Japan’s stronger-than-expected preliminary Q2 GDP data , which seems to have raised the perceived chance of a BoJ rate hike …
15th August 2025
For the time being, there is little sign of either US equities or bonds being undermined by faltering trust in key economic data. But that might not last. One reason for a potential loss of trust in economic data is scepticism about their accuracy . This …
14th August 2025
The near-term outlook for China’s equities could be quite positive, despite the apparent headwinds. Today was a good day for China’s stocks, especially offshore, with the Hang Seng up over 2% and outperforming most others. But, the market still has a lot …
13th August 2025
Today’s July US CPI data came in broadly in line with consensus expectations, so have done little to shift the prevailing market narrative that the FOMC is on track to resume cutting its policy rate in September. However, the “twist steepening” of the US …
12th August 2025
We expect the Switzerland-Germany 10-year government bond yield spread to widen a little further, even though it’s already the largest it has been in about three decades. Long-dated Swiss and German government bonds, once seemingly tightly linked, have …
A simple argument can be made that the US stock market would falter next month if the Fed didn’t cut rates, the logic being that Treasury yields would rise and reduce the present value of firms’ future earnings. But things might not play out that way. …
11th August 2025
After notching one of their biggest 1-day falls in recent years last Friday, Treasury yields have this week traded in a historically tight range despite no shortage of catalysts. If we’re right to expect a hot US CPI print next week, that apparent calm …
8th August 2025
The surprisingly hawkish tone struck by the Bank of England today has increased the chances it will slow down the pace of rate cuts from one per quarter. But our view remains that Bank Rate will be cut further than investors anticipate, driving the …
7th August 2025
Although there are growing concerns in some quarters about the health of the US economy, neither equity analysts nor investors seem worried. Admittedly, when it comes to equity analysts’ forward-twelve-month (FTM) projections for earnings per share (EPS), …
6th August 2025
We don’t expect the relentless march of ‘growth’ over ‘value’ in the S&P 500 to end soon, regardless of what happens to ‘risk-free’ real Treasuries. The past few months have seen growth outperform value in the S&P 500 as the 10-year TIPs yield has dropped …
5th August 2025
Financial markets have stabilised after Friday’s US payrolls shock and, unlike this time last year, there are few signs that large swings in government bond and currency markets are leading to a broader unravelling in risk sentiment. We continue to …
4th August 2025
Weak non-farm payrolls data have left investors concluding that a September Fed rate cut is almost nailed on and sparked a reassessment of risk across markets. We think this reassessment is slightly overdone, and that sentiment around AI is likely to …
1st August 2025
Judging by yesterday’s policy announcement and Chair Powell’s press conference remarks, the FOMC doesn’t look to be in a hurry to change its policy stance. That points to somewhat higher Treasury yields and a flatter yield curve. It also supports our view …
31st July 2025
Faster growth in earnings per share (EPS) is the main reason why equities in the US have fared better in local-currency (LC) terms than those in the euro-zone since the Global Financial Crisis (GFC). With than in mind, today’s GDP releases for the US and …
30th July 2025
It’s increasingly looking as though the S&P 500 will continue to power ahead. At the time of writing, S&P 500 futures were pointing to fresh all-time high at Tuesday’s open. But even if it slips a bit, the index has probably already surpassed an …
29th July 2025
Euro-zone equities have, in general, already given back much of their gains after this weekend’s trade deal between the US and the EU. And we don’t foresee a new wave of euro-zone exceptionalism. One reason is our view of the euro, which fell quite …
28th July 2025
The combination of some relatively hawkish signals from the ECB yesterday and some more soggy data out of the UK has sent the euro to its strongest level against sterling since late 2023. We think there is more to come on that front as the BoE continues …
25th July 2025
The ECB has left rates unchanged and, with inflation at target, we now suspect its monetary easing cycle is over. So bond yields are unlikely in our view to fall much, particularly at the short end. We still expect the euro to fall, but that reflects our …
24th July 2025
We think Japan’s equities will do well over the rest of this year, even accounting for their big rally today, and that the yen will recover in time. But, the trade announcement looks like worse news for JGBs, especially at the front end. US President …
23rd July 2025
Government bond yields in the euro-zone are converging, and we expect the “peripheral” frontier to keep blurring. Fears about deteriorating public finances are mounting in many places – for instance, Gilt yields opened higher today as an early data …
22nd July 2025
The result of this weekend’s Upper House election in Japan may not reverse the recent rout at the very long end of the JGB market when it re-opens after a holiday on Monday, given the possibility that fiscal policy will be loosened in due course. But …
21st July 2025
We don’t think worries about Japan’s fiscal position are too severe, and expect the country’s equities and exchange rate, at least, to recover by the end of the year. At face value, concerns about Japan seem to be building again. The yen, for example, has …
18th July 2025
Yesterday’s reports that President Trump is considering firing Fed Chair Powell imminently were quickly denied and most key market prices have reverted to roughly where they were before the news broke. But the sharp price swings in the hour or so between …
17th July 2025
Yesterday’s further ‘narrowing’ of the US stock market will have left it increasingly ‘concentrated’. But we don’t think these trends will reverse any time soon. And they may strengthen next year. To re-cap, more than 90% of the stocks in the S&P 500 fell …
16th July 2025
The latest US CPI report showed limited sign of any tariff impact but we continue to think that a rebound in inflation remains a headwind to US stock and bond markets this year – though it would probably help to drive a rebound in the US dollar. US CPI …
15th July 2025
The Trump administration’s continued re-escalation of tariffs threats have so far made limited impact on financial markets, but one key difference in the way market participants have digested the recent flurry of threats is that the dollar has …
14th July 2025
We think concerns about government deficits could put further pressure on long-dated bonds. Tests of investors’ nerves have come thick and fast lately, with the latest being a hike in tariffs in Canada. But, despite some small wobbles, the big picture is …
11th July 2025
Donald Trump’s planned imposition of a 50% tariff on Brazil for seemingly political reasons may represent a new milestone, but Brazil simply isn’t a big enough trading partner of the US to rattle global markets. For that to happen, negotiations with …
10th July 2025
Even if tariffs on US imports don’t rise substantially more next month for many countries after yet another delay, who is ‘paying’ for the increases in tariffs that have already occurred and appear likely to remain in place? The Q2 earnings season, which …
9th July 2025
Market participants have largely shrugged off President Trump’s latest set of threats to raise tariffs on a range of countries, focusing on the fact that today’s “deadline” for re-imposing the “reciprocal tariffs” from 2 nd April has, as widely expected, …
8th July 2025
Despite the uncertainty about tariffs, we continue to expect US markets – especially equities and the dollar – to rally over the rest of the year. There have been two key parts of the US tariff drama that have mattered for markets over the past couple of …
7th July 2025
There may be little to stand in the way of further gains in the S&P 500 this summer, provided today’s enactment of the ‘One Big Beautiful Bill’ is followed next week by a market-friendly decision on tariffs and the upcoming earnings season doesn’t spring …
4th July 2025
Another robust US payrolls report supports our view that the FOMC will remain on hold this year and, in turn, our forecast for Treasury yields and the dollar to rebound over the coming months. Today’s June US non-farm payrolls report came in stronger than …
3rd July 2025
We expect Treasuries to struggle over the rest of the year, despite their recent strong run. At the time of writing, Treasuries’ weeks-long rally seemed to have hit pause . One trigger seemed to be Fed Chair Powell’s comments at the ECB’s Sintra …
2nd July 2025
The weakness in the dollar in June was easier to explain than its slide in April and May since – unlike in those months – it was accompanied by a shift in bond yields that might have been expected to weigh on the greenback. Even so, there is still a lot …
1st July 2025
With the S&P 500 at a new all-time high, its fall of more than 20% earlier this year already seems like a distant memory. However, we don’t think it’s really back to square one for US equities. For a start, equity indices tend to follow an upward trend. …
30th June 2025
Although the US dollar has tumbled as President Trump has ramped up the pressure on the Fed to cut rates, we don’t think investors are that concerned about the central bank’s independence yet. But the longer the attacks go on, the greater the pressure on …
27th June 2025
The Fed’s proposed loosening of supplementary leverage ratio (SLR) rules for big banks might help to improve demand for Treasuries, but we’re not yet persuaded it will outweigh the other headwinds facing the world’s largest bond market. Treasuries have …
26th June 2025
With the S&P 500 almost back at a record-high, we take stock of the different drivers of the US stock market’s recent (mis)fortunes. We suspect that the conditions will soon be back for equities in the US to lead those in the rest of the world. Four …
25th June 2025
The overnight announcement of a ceasefire between Israel/US and Iran has brought commodity and financial markets largely back to their pre-conflict square one. While tensions remain high and could easily re-ignite, our sense is that attention will now …
24th June 2025
US involvement in the Israel/Iran conflict has so far prompted just some volatility in global financial markets, with most major asset classes ultimately not far away from where they were on Friday. It’s easy, though, to see growing downside risks. …
23rd June 2025
In general, stock markets tend to be less affected by energy markets today than in the past. But the Israel-Iran conflict has already produced some interesting patterns in stock markets around the world amid a rise in energy prices. Much has been made of …
20th June 2025
We continue to think Treasury yields will rise, as the Fed stays on hold longer than investors expect. There was minimal market reaction on Wednesday (local time) to a cautious Fed : policy was left on hold, the statement was almost unchanged, and the …
19th June 2025
Fears that the US may get involved in the ongoing Israel-Iran conflict have led to another pick-up in oil prices and renewed jitters across financial markets. The impact so far remains limited, but as the conflict continues the risk of a more material …
18th June 2025
Although we’ve become less confident the Bank of Japan (BoJ) will raise its policy rate again this year given its view of the risks to growth and inflation, for now we are sticking to our forecast that the 10-year JGB yield will rise to 1.75% by the end …
17th June 2025
Despite the further escalation in the Israel-Iran conflict over the weekend, the impact on major financial markets has remained relatively limited. Unless there is actual (not just feared) disruption to energy export infrastructure, the economic and …
16th June 2025
At the time of writing, global markets were in a “risk-off” mood after Israel’s strikes on Iran. We think there are three key initial points to make. First, as is almost always the case when Middle East tensions escalate, the key channel through which …
13th June 2025
President Trump’s latest tariff threats, combined with some softer US price and employment data, has sent the US dollar to its lowest level, in aggregate, in more than three years. There are still some factors that point to a near-term rebound, but that …
12th June 2025
Yet another downside US CPI surprise gave only a small boost to Treasuries, probably because tariff-driven price hikes still look imminent. That said, these price hikes look discounted in markets, so we don’t expect much upwards pressure on Treasury …
11th June 2025
