Preview: Due May 30 - U.S. April Personal Income and Spending - Core PCE Prices to underperform Core CPI

May 29, 2025 2:23 PM UTC

We expect a 0.1% rise in April’s core PCE price index, even softer than a 0.2% core CPI, though risk of a boost from tariffs persists in the coming months. We expect modest 0.3% gains in personal income and spending, which would imply gains of 0.2% in real terms, still some way off a recessionary

2025 Q1 Country Insights Scores to Download in Excel

May 29, 2025 10:00 AM UTC

The Country Insights Model is a comprehensive quantitative tool for assessing country and sovereign risk by measuring a country’s risk of external and domestic financial shocks and its ability to grow. The access to our full range of scores across 174 countries corresponding to the first quarter o

Court Stops Trump Reciprocal and Fentanyl Tariff

May 29, 2025 7:18 AM UTC

•    The Trump administration will likely follow a multi-track response by appealing the judgement but also fast-tracking section 232 product tariffs for pharmaceuticals and semiconductors.  The administration could also consider section 301 or 122 tariffs (the latter 15% for 150 days against c

ECB Council Meeting Preview (Jun 5): Much Earlier Sub-Target Inflation Outlook?

May 28, 2025 2:30 PM UTC

What is widely seen as an eighth 25 bp deposit rate cut in the current cycle on June 5 may be overshadowed by the ECB’s implicit if not explicit shift about the outlook thereafter.  The door will be left open for a move at the July 24 policy verdict given the array of news (probably negative part

The U.S. Slowdown Question Key for Markets

May 28, 2025 7:35 AM UTC

•    Though financial markets are debating the effects of the U.S. budget deficit trajectory on yields and how much global investors will reduce overweight U.S. exposure long-term, the critical question remains the scale of the economic slowdown and what it means for tactical asset allocation

U.S. April Durable Goods Orders - Subdued underlying picture, business investment slipping back in Q2

May 27, 2025 12:54 PM UTC

April durable goods orders with a 6.3% fall are a little less weak than expected and failed to fully reverse a 7.6% March increase that was led by aircraft (and originally reported as up 9.2%). The ex transport gain of 0.2% is a little stronger than expected, but only reverses a 0.2% decline in Marc

EZ HICP and Labor Market Preview (Jun 3): Headline Back Below Target as Services Inflation Reverses Easter Effect?

May 27, 2025 11:17 AM UTC

Exceeding expectations, EZ HICP inflation failed to fall in April, instead staying at 2.2%.  More notably, services inflation jumped 0.5 ppt to 4.0%, very probably due to the impact of the timing of Easter affecting airfares and holiday costs. As already seen in flash French May numbers, and as was

Eurozone: US Stepped-Up Tariff Threat – Negotiations or Concessions?

May 27, 2025 9:22 AM UTC

At least within markets there is some relief that President Trump has deferred his ramped up 50% tariff threat from early June to July 9.  Unambiguously positive is the fact that a better line of communication, if not rapport, now seems to exist between the U.S. president and EU Commission Presiden

Likely U.S. Tariff Scenario for Japan

May 26, 2025 5:36 AM UTC

After the U.S.-UK trade deal announcement, most countries are looking forward to lower tariffs. U.S.-Japan high level remarks are so far positive but lack concrete commitment. The U.S. has said that 10% tariff will be a baseline and we do not see Japan to be an exemption. However, we have a likely t

Big Beautiful Bill will bring larger US budget deficits

May 23, 2025 4:32 PM UTC

The “Big Beautiful Bill” on fiscal policy passed by the House was costed by the Congressional Budget Office on May 20 and shows a significant boost to the budget deficit in the remainder of the current Trump presidential term. This is because tax cuts have been front loaded and spending cuts bac

Eurozone: Waging War on Wages

May 23, 2025 1:35 PM UTC

After a protracted period of elevated EZ cost and price pressures, a reversal seems to be very much underway.  Headline and underlying HICP inflation have moved back toward target, but to reinforce this downtrend there are an increasing array of softer cost pressure signals.  ECB wage tracker and

ECB April Account: Neutral Rate Not Necessarily a Terminal Rate

May 22, 2025 12:46 PM UTC

The account of the April 16-17 ECB Council meeting suggested that the policy decision was more of a clearly agreed consensus, this papering over continued divides regarding the outlook; the risks from tariffs; and where inflation risks lie.  The seventh and widely expected 25 bp deposit rate cut (w

Eurozone: Services Offer Sobering News

May 22, 2025 9:00 AM UTC

The May flash composite PMI data may have fallen into apparent contraction territory as the index dropped to 49.5 in May from 50.4 in April, below the 50.0 no-change mark for the first time in five months and thereby signalling a reduction, albeit a marginal one.  We do not take much issue whether

RBA Review: Recognize Inflation Moderates and Upside Risk

May 20, 2025 5:32 AM UTC

The RBA meeting on May 20th cut rates to 3.85% and stated cautious in forward guidance

Eurozone: The European Commission Diverges From the ECB on Inflation

May 19, 2025 10:07 AM UTC

The European Commission (EC) Spring Forecast projects real EZ GDP growth in 2025 at 0.9%, some 0.4 ppt below its previous (autumn) view.   There is also a downgrade to the 2026 growth picture by 0.2 ppt to 1.4%, projections that carry downside risks and where we think they are still too optimistic

Moody's downgrades US debt as long-standing fiscal concerns mount

May 16, 2025 11:42 PM UTC

Moody’s downgraded US debt to AA1 from AAA after Friday’s close. The decision appears due to continued lack of action on the budget deficit rather that being triggered by any specific event, and brings Moody’s into line with S and P and Fitch. However the timing is awkward for markets, with th

Preview: Due May 30 - U.S. April Personal Income and Spending - Core PCE Prices to underperform Core CPI

May 16, 2025 6:44 PM UTC

We expect a 0.1% rise in April’s core PCE price index, even softer than a 0.2% core CPI, though risk of a boost from tariffs persists in the coming months. We expect modest 0.3% gains in personal income and spending, which would imply gains of 0.2% in real terms, still some way off a recessionary

Big EM’s: Cyclical Tariff Hit V Structural Drivers

May 16, 2025 10:00 AM UTC

China, India and Brazil are all seeing cyclical slowdown for varying reasons, with China likely to be hardest hit by adverse net exports due to Trump’s tariff wars. Though financial repression in China can allow further fiscal stimulus, the household sector and residential property investment are

U.S. April Retail Sales, Weekly Initial Claims - Only limited signs of slowing

May 15, 2025 12:57 PM UTC

April retail sales and weekly initial claims are in line with expectations, and consistent with a moderate slowing in the economy, but with no recessionary signals. It is however too early for the full impact of tariffs to be seen, particularly with the impact of tariffs on prices so far limited.

U.S./China Trade Truce Reduce Downside and Extra Stimulus Prospects

May 15, 2025 7:15 AM UTC

The alternative hard landing scenario in China has been reduced significantly with the trade truce with the U.S.  However, China will still have to cope with a minimum 30% overall tariff, with only around a 10% reduction in the fentanyl tariff likely to be agreed in the coming months.  Our baselin