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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
In this Update, we answer the key questions about what stablecoins are, whether they will become more widely used and what implications they have for the US Treasury market. What are stablecoins? Stablecoins are a type of cryptocurrency, whose value is …
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
The US dollar has stabilised to a degree this week after another solid non-farm payrolls report generated a bit of a rebound in US interest rate expectations. The bigger picture remains that the dollar is under pressure on account of both the perception …
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 still think gilts will rally over the rest of this year even if fiscal concerns don’t entirely abate, as the Bank of England cuts interest rates by more than investors seem to expect. But concerns about debt levels and a dovish central bank could be a …
The Taiwan dollar has appreciated sharply against the US dollar in recent months but, for a host of reasons, the central bank seems now to be less tolerant of further currency strength. Even without intervention, we think that the currency will give up …
2nd 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 …
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
The US dollar has generally lost further ground this week and the DXY index currently sits at around its lowest level since February 2022. This index has now fallen by more at this stage in the year than in any previous year since the US moved to a …
27th 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 …
With the noise around US tariffs and war in the Middle East fading, at least for now, we think the stage is set for some further decent returns from “risky” assets – especially US equities – over the next couple of years. But we suspect commodities will …
26th 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 …
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
The dollar has made some further gains this week, on net, but remains not far off its weakest level in three years. It has mainly benefitted on the back of a somewhat hawkish FOMC announcement, which contrasts with dovish policy signals from some other …
20th 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 …
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
The dollar has recovered some of the ground it lost earlier in the week in the wake of Israel’s overnight strikes on Iran. While that still leaves the greenback near its lowest level in more than three years, and close to breaking below the bottom of its …
13th 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 …
The overnight strikes by Israel on Iran mark a major escalation in the conflict in the region and, with the oil market tighter than it was a few months ago, the risks to oil prices look more balanced than we’d previously thought (rather than skewed to the …
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
US-China trade negotiations ongoing in London this week have the potential to have a bearing on financial markets, perhaps especially in China. We think there are two key questions to consider. First, how much of a boost could an eventual “deal” – or …
10th June 2025
With one month to go until the “pause” of the Trump administration’s “reciprocal tariffs” is, at least in principle, set to expire, market participants continue to take a pretty relaxed view of the risks around US trade policy. That probably makes sense, …
9th June 2025
The US dollar is enjoying a strong end to the week thanks to signs of economic resilience in the latest US Employment Report but, for the second week in a row, the DXY Index is little changed on net. Such small consecutive weekly moves (up by ~0.2% last …
6th June 2025
May’s Employment Report in the US ought to assuage concerns about the economy after some softer data earlier this week. But even if growth there holds up over the rest of the year, investors’ current outlook suggest there may be only limited upside for …
While the ECB cut its policy rate today, as widely expected, President Lagarde’s accompanying comments tilted hawkish and have given interest rate expectations and the euro a boost. Our view remains that the ECB will deliver at least one more rate cut …
5th June 2025
We doubt Section 899 of the One Big Beautiful Bill that passed the House of Representatives in May will have the big negative effects on US asset markets that some seem to fear, even if it remains largely untouched in the Senate. To re-cap, Section 899 …
4th June 2025
Below-target inflation in the euro-zone and deflation in Switzerland bring back memories of the 2010s, but the drivers of low inflation are fundamentally different this time and we don’t see much scope for government bond yields to fall. Data released …
3rd June 2025
To some extent, the persistent underperformance of US small-cap (SC) equities probably reflects lingering concerns about the effects of Donald Trump’s policies on the economy. But even if fears of a recession fade, we doubt US SC equities will fare better …
2nd June 2025
The dollar has stabilised overall this week amid continued uncertainty around US trade policy and questions around the fiscal package that is still working its way through Congress. Market participants appear increasingly to be looking through the latest …
30th May 2025
This report is part of our Future of Europe series. Read more analysis, explore the supporting data, and learn about our broader European coverage on the dedicated Future of Europe page. Europe is being buffeted by geopolitical and geoeconomic shifts but, …
We’re cautiously optimistic about the prospects for China’s stock market over the rest of the year, despite the clear headwinds it faces. It’s not surprising that China’s equity markets have been among the most volatile globally over the past day or so , …
Despite a positive initial reaction in global stock markets to yesterday’s ruling by the US Court of International Trade (CIT), there is still plenty of uncertainty about future tariffs on US imports. So a really big boost to equities may not be on the …
29th May 2025
In this Update, we answer several key questions about how the US Court of International Trade (CIT) tariff ruling might affect the US and other economies. The outlook may now rest on the decision of the Republican-stacked Supreme Court. The upside risks …
Despite all of the debt and deficit news out of the US, the spotlight in ultra-long bond markets has increasingly been focused on Japan. The surge in yields there last week seems to have sparked a global sell-off, and the subsequent plan from Japan’s …
28th May 2025
The 10-year Treasury term premium, as estimated by ACM , rose to a more-than-decade high of ~0.9% last week amid renewed concerns about US fiscal policy. But while the premium remains far below the ~4% it topped in the early 1990s, for example, we doubt …
27th May 2025
President Trump’s recommendation of a 50% tariff on the EU gave the dollar only a short-lived boost and the DXY index is still on track to snap a four-week ‘winning’ streak. This looks likely to be the largest weekly decline since early April and, as was …
23rd May 2025
We think the yields of Japanese government bonds will continue to rise, but because of BoJ hikes rather than concerns about fiscal sustainability. Fragile bond market sentiment hasn’t been limited to the US lately: a sharp rise in yields in Japan has …
The passage of Donald Trump’s ‘one, big beautiful bill’ through the House of Representatives today has done little to calm nerves in the bond market, which had already been frayed by Moody’s recent decision to downgrade the US’ sovereign credit rating and …
22nd May 2025
Debate over the end of US equity exceptionalism had quietened over the past month amid a historic rally, but with US assets selling off today debate may reignite. Our sense is that US stocks will hold up well against their peers over the rest of the year. …
21st May 2025
We see dimmer prospects for oil prices over the next year or so. But we think that will keep being a sideshow for US equity and bond markets. Admittedly, there has been a sizeable effect on the share prices of US energy companies in general, which is …
20th May 2025
