If the Fed’s tightening cycle ends today, as we expect, then the yield curve will be unusually inverted for this point in the monetary policy cycle. We think it will remain so until next year. Although money markets discount some chance of further …
26th July 2023
Chinese equities enjoyed one of their best days in years today, and we think they may continue to outperform equities elsewhere over the rest of this year. But the longer-term prospects for China’s stock market still look relatively unappealing to us. …
25th July 2023
Euro-zone government bond yields have fallen further following the release of disappointing PMIs today. Given our pessimistic view of the economy, we suspect that they will generally end the year a bit lower still. As euro-zone PMIs for July came in …
24th July 2023
We expect the fortunes of the Japanese yen and Mexican peso – which have both been outliers in different ways lately – to soon reverse, as souring risk appetite unwinds some “carry trade” and their relative valuations provide scope for adjustment. Amid …
21st July 2023
As the second quarter US reporting season gets into full swing, it’s easy to lose sight of the big picture: the peak-to-trough drawdown in earnings per share (EPS) from last year has not only been smaller than typically seen in an economic downturn, but …
20th July 2023
More evidence that inflation is falling back in most economies has pushed government bond yields down across developed markets (DMs) over the past couple of weeks. We think that disappointing growth, as well as central banks eventually cutting rates by …
19th July 2023
All is well in the US economy – at least according to financial markets. But we think investors are underestimating the chance of an economic slowdown. The mixed news in the US retail sales and industrial production data, released today, didn’t seem to do …
18th July 2023
With yet more disappointing news about China’s economic rebound, it is worth taking stock of the headwinds facing the country’s equity market. For a start, the market reaction to the release of China’s Q2 GDP data has been fairly limited, both in Chinese …
17th July 2023
Equity, bond, and FX investors seem to have shrugged off the recent rise in oil prices. We wouldn’t be surprised if that continued even if prices rose further. Although they’ve taken a breather today, oil prices have been on a tear lately. WTI, which had …
14th July 2023
Renewed murmurs of additional tweaks to the Bank of Japan’s (BoJ) Yield Curve Control (YCC) policy are giving further impetus to the yen’s recent rally. Though we forecast the yen to strengthen against the dollar this year, that forecast is driven mainly …
13th July 2023
Bigger falls in US core inflation than in the euro-zone or UK might mean government bond yields decline a bit more quickly in the US over the rest of this year, but ultimately we expect yields to fall in all three economies over time. June’s US CPI data …
12th July 2023
Enthusiasm around artificial intelligence (AI) seems to have waned a bit recently, and it may continue to do so if, as we expect, growth struggles later this year. But we think that it will resume sometime in 2024 and push the S&P 500 much higher. Over …
11th July 2023
There were two intriguing developments in bond markets last week, as the 10-year Treasury yield surged above 4% to its highest level since March. The first was a similar-sized increase in the 10-year Bund yield, to more than 2.6%. Th e second was an ~20bp …
10th July 2023
Signs the US labour market is beginning to loosen support our view that bond yields and equities could fall further, while the greenback could rally. Labour market data out of the US over the past two days has sent mixed messages : yesterday, the ADP …
7th July 2023
We still think a recession is on the way in the UK, and that it will bring gilt yields back down. Developed market sovereign bond yields have been on the rise again so far today , as investors have continued to price back in the “higher for longer” …
6th July 2023
The valuations of equities are, in general, still a long way from being unprecedently high compared to those of government bonds. There are umpteen ways to compare the valuations of equities and government bonds. One recent development in the UK to catch …
5th July 2023
China has stepped up its support of the renminbi, which has rebounded over the past couple of days. This may well prove a turning point for the currency. Three key points are worth emphasising. First, China’s approach to managing its exchange rate has …
4th July 2023
US stock markets ’ gains in recent months , both in absolute terms and relative to their European peers, owe a lot to their rising valuations. But equities in the US are now arguably quite highly valued, which in our view will contribute to them …
3rd July 2023
“Risky” assets are clearly leading “safe” assets as we approach the halfway point of the year. But with recessions looming, we expect souring risk appetite to turn the game on its head in the second half. At the start of this year, many – including …
30th June 2023
The Riksbank’s curious communication choices around its foreign exchange reserves earlier today highlight both the challenges depreciating currencies pose to policymakers and the particular vulnerability of the Swedish krona. To recap, the Riksbank hiked …
29th June 2023
We expect the yen ’ s weakness to reverse before long, weighing on the country ’ s stock market. And while the latter might hence hold up a bit better in US - dollar terms, we doubt it will do especially well. Today ’ s gains add to what has been a great …
28th June 2023
Latin American equities have, in US dollar terms, fared even better than their US peers so far this year. We think that their outperformance will be interrupted by the global “risk-off” environment we anticipate over the rest of this year, but suspect the …
27th June 2023
Limited fallout from tensions in Russia, for now The Wagner mutiny in Russia this weekend seems to have ended as quickly as it escalated, having had far less impact on global financial and commodity markets than Russia’s invasion of Ukraine last year. …
26th June 2023
Lower-than-expected euro-zone PMIs in June support our view that economic activity will disappoint, which we think will push the euro and government bond yields down by the end of 2023. Underwhelming PMIs in the euro-zone have put some pressure on the …
23rd June 2023
A disparate range of global central banks have delivered their latest policy rate verdicts over the past 24 hours. We think there are four key points for investors to note. First, European central banks are clearly still in hawkish moods. But while that …
22nd June 2023
Yet another upside surprise to UK inflation today has put the spotlight squarely back on Gilts and sterling, both of which have come under pressure ahead of tomorrow’s Bank of England policy announcement. There are four key points to consider for the …
21st June 2023
While the AI revolution has prompted us to revise up our forecasts for US equities today, we don’t think it changes the outlook for US corporate credit spreads much. We think spreads still look too low. Much has been written about the fact that the …
20th June 2023
The greater inversion of yield curves, in response to the prospect of higher-for-longer interest rates, suggests to us the strength of equities won’t last. To re-cap, yield curves have recently tended to become more inverted on both sides of the Atlantic. …
19th June 2023
We think the Bank of England will hike its policy rate by another 25bp, to 4.75%... (Thu.) …while Turkey’s new central bank governor will kickstart a rapid tightening cycle (Thu.) The euro-zone composite PMI probably ticked down in June but remained above …
16th June 2023
We expect the BoJ to leave its policy settings unchanged on Friday US consumer confidence may have risen in June, but probably remained weak (15.00 BST) Sign up to our Drop-In to digest next Thursday’s BoE meeting here Key Market Themes While the ECB …
15th June 2023
The Fed is likely to “skip” a hike (Wednesday) ECB policymakers will probably raise their policy rates by 25bp (Thursday) We expect the PBOC to lower its 1-year MLF rate from 2.75% to 2.65% (Thursday) Key Market Themes Investors may be right about the …
14th June 2023
We think UK real GDP rose a bit in April (07.00 BST) Euro-zone industrial production probably edged up in April (10.00 BST) We expect the Fed to leave interest rates unchanged (19.00 BST) Key Market Themes The 10-year Gilt yield has continued to march …
13th June 2023
UK wage growth probably accelerated in April (07.00 BST) We think US core inflation eased to an 18-month low of 5.2% in May… (13.30 BST) … and the headline inflation rate may have fallen to 4.1% (13.30 BST) Key Market Themes Emerging Market (EM) …
12th June 2023
We think US core inflation slowed from 5.5% to 5.2% in May (Tue.) We expect the Fed to leave its policy rate on hold this week, but hike in July (Wed.) ECB will probably deliver another 25bp rate hike but BoJ set to leave policy on hold Key Market Themes …
9th June 2023
We think Peru’s central bank will leave its policy rate on hold (00.00 BST) Inflation in China was probably very low last month… (02.30 BST) … but we think it remained elevated in Norway (07.00 BST) Key Market Themes After sitting out most of this year’s …
8th June 2023
We expect the RBI to keep interest rates on hold on Thursday (05.30 BST) A revision to euro-zone Q1 GDP could show the bloc in a technical recession (10.00 BST) Sign up for our Drop-In to unpack the major June central bank meetings here Key Market …
7th June 2023
Australia’s central bank hiked rates on Tuesday while policymakers in Poland stood pat We expect the Bank of Canada to raise its policy rate by 25bp to 4.75% (15.00 BST) Trade data from the US and China likely to show a fall in exports in both countries …
6th June 2023
We expect the RBA to hike by 25bp (05.30 BST) By contrast, Poland’s central bank will probably leave rates on hold Euro-zone retail sales are likely to have stagnated in April (10.00 BST) Key Market Themes OPEC+ ’s decision over the weekend to cut oil …
5th June 2023
We think May’s ISM Services Index remained broadly consistent with stagnant US GDP (Mon.) We expect policy rate hikes of 25bp from Australia’s central bank, to 4.10%... (Tue.) … and from the Bank of Canada, to 4.75%(Thu.) Key Market Themes Despite the …
2nd June 2023
We think Korea’s inflation fell in May, in line with weaker economic growth (00.00 BST) The US labour market probably loosened further last month (13.30 BST) Watch back today’s Drop-in on the outlook for EM equities on demand here Key Market Themes …
1st June 2023
House of Representatives to vote on the Fiscal Responsibility Act late on Wednesday Clients can sign up here for three of our Drop-Ins tomorrow… … these will be focused on euro-zone inflation, OPEC+, and the case for EM equities Key Market Themes While …
31st May 2023
“Official” China PMIs may show a further slowdown in the reopening rebound (02.30 BST) We expect Thailand’s central bank to hike by 25bp, to 2.00% (08.00 BST) Canada’s rate of growth probably picked up in Q1 (13.30 BST) Key Market Themes A sense that …
30th May 2023
China’s May PMIs are likely to show the momentum from re-opening fading Euro-zone inflation probably fell in May, but we think the core rate was steady (Thu.) We think US non-farm payrolls increased by 200,000 in May (Fri.) Key Market Themes We expect any …
26th May 2023
We think UK retail sales contracted again last month (07.00 BST) US real consumption and durable goods orders probably picked up in April (13.30 BST) Meanwhile, we think US core PCE inflation rose by another 0.3% m/m (13.30 BST) Key Market Themes Higher …
25th May 2023
We think Turkey’s central bank will keep its policy rate at 8.5%... (12.00 BST) … while policymakers in South Africa will deliver a 50bp rate hike, to 8.25% (14.00 BST) Clients can sign up here for tomorrow’s Drop-In on China’s economic outlook Key …
24th May 2023
We expect the RBNZ to hike interest rates by 25bp, to 5.50% (03.00 BST) We think UK inflation fell from 10.1% in March to 8.0% in April… (07.00 BST) …and clients can sign up here for tomorrow’s Drop-In on UK inflation (10.00 BST) The “higher for longer” …
23rd May 2023
We think the May euro-zone PMI will suggest growth there slowed a bit… (09.00 BST) …while we think the UK PMI changed little from the previous month (09.30 BST) We expect Hungary’s central bank to leave policy unchanged (13.00 BST) Key Market Themes The …
22nd May 2023
We think China’s Loan Prime Rate will be left unchanged (Mon.) We expect the Reserve Bank of New Zealand to raise its policy rate by 25bp, to 5.50% (Wed.) Real consumption in the US probably rebounded a bit in April (Fri.) Key Market Themes We suspect a …
19th May 2023
We expect Mexico’s central bank to deliver a final 25bp hike, to 11.50% (Thu.) We think inflation in Japan climbed further in May (Fri.) Canada’s retail sales probably fell in March (Fri.) Key Market Themes The S&P 500 has posted solid gains in 2023, but …
18th May 2023
We think the Philippines’ central bank will pause its tightening cycle… (08.00 BST) …but expect Egypt’s central bank to hike its policy rate by 200bp A number of US data releases tomorrow may show signs of weakness Key Market Themes We think the recent …
17th May 2023
