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June 20, 2024

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U.S. Outlook: Economy Starting to Lose Momentum
Paying Article

June 20, 2024 6:17 PM UTC

•    The U.S. economy is starting to lose momentum after a surprisingly strong second half of 2023, and we expect the loss of momentum to become more apparent in the second half of 2024, causing a slowing in employment growth from its current strong pace. We expect inflation to resume a gradua

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SNB: 25bps Cut and Next Cut in September
Paying Article

June 20, 2024 8:34 AM UTC

The SNB cut by 25bps to try and stop inflation undershooting.  We look for a further 25bps cut in September, as the new inflation forecasts remains too far below target for SNB comfort. CHF strength will also not ebb quickly given the prospect of prolonged French political uncertainty.  

June 19, 2024

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BCB Review: A Pause in the Cutting Cycle
Paying Article

June 19, 2024 10:17 PM UTC

The Brazilian Central Bank kept the policy rate at 10.5%, citing economic uncertainty and a need for caution. Inflation expectations for 2025 are 3.8%, above the 3.0% target. Political interference concerns persist, but the unanimous decision indicates a technical approach. The BRL's depreciation ma

Chartbook: Chart USD Index DXY: Consolidating - potential for a minor test lower in the coming weeks
Paying Article

June 19, 2024 11:42 AM UTC

There has been little change in price action in 2024Q2

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China Outlook: 2024 on Track, but 2025 Headwinds

June 19, 2024 9:35 AM UTC

Public investment and industrial production in high tech and renewables are helping to support growth and should get the economy close to 5% in 2024.  However, underneath the surface, consumption is slowing, private sector investment and employment growth is sluggish, and residential property inves

June 18, 2024

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U.S. May Retail Sales suggest consumer spending losing momentum
Paying Article

June 18, 2024 12:49 PM UTC

May retail sales with a 0.1% increase are weaker than expected and the downside surprise is larger when noting modest downward revisions to May and April. May sales fell by 0.1% ex autos and rose by only 0.1% ex autos and gasoline. 

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France Debt: Dependent on Non-Residents
Paying Article

June 18, 2024 9:20 AM UTC

Any further major fiscal slippage under a new government could prompt more of a reduction in French government bond exposure, which would likely mean a multi month/quarter risk premia for France and cause spillover difficulties for Italy. It is worth remembering that France is dependent on non-resid

RBA Review: Recognized slower inflation moderation
Paying Article

June 18, 2024 5:06 AM UTC

The RBA meeting on June 18th has kept rates on hold and see the moderation of inflation slower than expected

June 17, 2024

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China Data: Mixed Momentum and No MTF Cut Until October
Paying Article

June 17, 2024 6:59 AM UTC

Overall the May data suggests that enough momentum exists for Q2 GDP to be above 5.0% Yr/Yr, which given the Q1 GDP figure means that the odds are good that the 2024 5.0% GDP target can be meet.  However, we see a softer of H2 GDP and 4.0% GDP in 2025, given weak domestic demand is unlikely to chan

June 14, 2024

BoJ Review: Pushing Hikes to July, if any
Paying Article

June 14, 2024 5:24 AM UTC

BoJ keep rates and bond purchase the same, suggesting the planning for bond purchase cut will be decided in July

June 12, 2024

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Mexico: Political Noise Amplifies Market Fears Amid Sheinbaum's Win
Freemium Article

June 12, 2024 9:07 PM UTC

Claudia Sheinbaum's election win was expected, but MORENA's strong victory was surprising. This led to market concerns, significant peso depreciation, and fears of anti-market policies under Sheinbaum's possibly more radical government. Lopez-Obrador's proposed judicial reforms added to market worri

June 11, 2024

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DM Fiscal Consolidation Problems: Politics/Central bank QT and Low Nominal GDP
Paying Article

June 11, 2024 2:10 PM UTC

 Some governments are politically reluctant to restrain government expenditure growth or in the U.S. case raise taxes.  This means that intermittent fiscal stress and concerns can be seen in the coming years.  However, to get to crisis levels would require a government that abandons any attempts

June 07, 2024

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China Excess Production: Exports Going Cheap?
Paying Article

June 7, 2024 8:45 AM UTC

China excess of production over domestic demand is causing disinflation pressures in China, but also leading to a fall in export prices as China companies seek buyers for production.  Though this is a helpful factor to the global inflation debate, it is causing trade tensions with the U.S. and EU o

June 05, 2024

U.S. May ISM Services - Above trend month after a below trend month
Paying Article

June 5, 2024 2:26 PM UTC

Like May’s S and P services index (unrevised at 54.8), May’s ISM services index has also exceeded expectations, rising to 53.8, its highest since August 2023, from a weak 49.4 in April. Probably not too much should be made of an above trend number in May or the below trend number in April.

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Sub Sahara Africa: Country Risk Ratings
Paying Article

June 5, 2024 9:00 AM UTC

We provide country risk reviews for Sub Sahara Africa countries including Ethophia/Kenya and Ghana.  

June 03, 2024

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Mexico Elections: Sheimbaum Wins as Expected but the Surprise is in the Legislative
Freemium Article

June 3, 2024 3:03 PM UTC

The Mexican election saw Sheinbaum from MORENA likely securing 57-60% of the votes, a significant lead over Xóchitl Gálvez. The MORENA coalition is projected to gain a two-thirds majority in the Chamber of Deputies but may fall short in the Senate. This result raises concerns over potential anti-m

May 31, 2024

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South Africa Elections: A Coalition Government is on the Horizon
Paying Article

May 31, 2024 3:03 PM UTC

Bottom line: As we forecasted in our previous pieces, it seems a coalition government with an ANC-lead will be formed following the presidential elections on May 29, according to the preliminary results. It is very likely that ANC will be losing its majority dipping below 50% as it is currently the

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U.S. April Personal Income and Spending - PCE Prices close to 0.25% headline and core
Paying Article

May 31, 2024 1:13 PM UTC

April’s personal income and spending data is subdued, if in line with expectations, with the core PCE price index up by 0.2%, overall PCE prices up by 0.3%, with personal income up by 0.3% and spending up by 0.2%. Before rounding core PCE prices were up 0.249% with overall PCE prices at 0.257%, so

May 29, 2024

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2024 Q1 Country Insights Scores to download in Excel
Paying Article

May 29, 2024 9:05 AM UTC

Below is the access to our full range of scores across 174 countries.

May 24, 2024

U.S. April Durable Goods Orders - Rise fully on defense but some underlying improvement
Paying Article

May 24, 2024 12:58 PM UTC

April durable goods orders are stronger than expected, and while the gains of 0.7% overall and 0.4% ex transport are moderate, they are a little above recent trend. While the overall rise came fully on defense, gains in non-defense capital ex aircraft orders of 0.3% and shipments of 0.4% suggest bus

May 21, 2024

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BOE: August Expected But Could be June and Not Enough Discounted
Paying Article

May 21, 2024 11:11 AM UTC

The market is not discounting enough BOE easing in the next 6-18 months during which we see a cumulative 175-200bps of cuts.  The BOE is swinging from a reactive to proactive policy stance and will take account of the prospects of further wage and service inflation slowing.  UK fiscal tightening w

May 20, 2024

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ECB: June Rate Cuts Too Trigger More Rate Cut Expectations for 2024/25
Paying Article

May 20, 2024 10:50 AM UTC

However much the Council will resist fueling discussion of possible easing path, confirmation of a 1 cut normally increases speculation over further easing in subsequent quarters and we see 25bps in June followed by 25bps in September and December.  The market could discount some more easing over t

May 16, 2024

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France and Japan: Debt Fuelled Growth Problem
Paying Article

May 16, 2024 10:30 AM UTC

Most of the surge in debt/GDP in Japan and 40% in France is due to higher government debt and this should not be a binding constraint provided that large scale QT is avoided – we see the ECB slowing QT in 2025 and are skeptical about BOJ QT in the next few years.  The adverse impact of higher deb

May 15, 2024

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China: Too Much Debt In Some Sectors
Paying Article

May 15, 2024 9:55 AM UTC

While part of corporate debt is quasi government (SOE and LGFV’s) and China creditors can be pursued to rollover by the authorities for larger borrowers, households and part of the private sector are focused on the previous buildup of debt.  With China authorities reluctant to aggressive ease fis

May 14, 2024

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BCB Minutes: Worsening Conditions Demand Caution
Paying Article

May 14, 2024 2:35 PM UTC

The Brazilian Central Bank's latest meeting revealed a shift in forward-guidance, reducing the cut from 50bps to 25bps. While no immediate actions were taken, the minutes highlighted worsening conditions in three key areas: External Environment, Fiscal, and Economic Activity. Despite split votes on

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India Inflation Review: Sticky Prices to Keep RBI Cautious
Paying Article

May 14, 2024 3:54 AM UTC

India’s consumer price inflation eased amrginally to 4.83% yr/yr in April, reflecting lower fuel and light prices. The government cut prices of LPG cylinders in India ahead of the elections. However, food price pressures persist despite various supply side measures, underscoring the sticky nature

May 13, 2024

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China RRR and Rate Cuts
Paying Article

May 13, 2024 7:54 AM UTC

The latest China money supply and lending figures show that private household and business lending is very subdued.  More need to be done to boost credit demand as well as credit supply.  However, the authorities desires to avoid too much Yuan weakness will likely mean that the next move is a 25bp

May 10, 2024

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Asset Allocation 2024: Tricky Seven Months Remaining
Paying Article

May 10, 2024 1:06 PM UTC

Fed easing expectations for 2025 and 2026 can shift from a terminal 4% Fed Funds rate towards 3%, as the U.S. economy slows due to lagged tightening effects.  Combined with Fed easing starting in September this should mean a consistent decline in 2yr yields.  However, 10yr U.S. Treasury yields wil

May 09, 2024

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BCB Review: 25bps Cut, No Additional Guidance
Paying Article

May 9, 2024 1:11 PM UTC

The Brazilian Central Bank convened, opting against a 50bps cut, reducing it to 25bps, lowering the policy rate to 10.5%. A split vote ensued, with 25bps winning 5x4. The communique, vague possibly due to board division, noted labor market and economic activity surpassing expectations. Foreign marke

May 08, 2024

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China Equities: A Tactical Play
Paying Article

May 8, 2024 2:20 PM UTC

China equities can see a tactical bounce of 5-10% in the coming months.  Cheap valuations and  underweight global fund positions means that the scale of pessimism only has to get less bad on the economy and China authorities attitude towards businesses.  While we see a tactical opportunity, we do

May 07, 2024

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U.S. Fiscal Problems: 2025 More Than 2024
Paying Article

May 7, 2024 1:10 PM UTC

Current real yields in the U.S. government bond market already large reflect the large government deficit trajectory.  Even so, H1 2025 could see some extra fiscal tensions that add 30-40bps to 10yr U.S. Treasury yields as the post president election environment will either see a reelected Joe Bide

May 03, 2024

U.S. April ISM Services - Weakness may be overstated
Paying Article

May 3, 2024 2:24 PM UTC

April’s ISM services index of 49.4 from 51.4 has fallen below neutral for the first time since December 2022. That dip was explained by bad weather. There is no obvious erratic factor here to explain the weakness, but the details suggests that weakness may be overstated.

May 02, 2024

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China Politburo: Help for Housing, But No Game changers
Paying Article

May 2, 2024 10:50 AM UTC

Politburo statement in late April suggests extra support for residential property.  However, we see this as being incremental rather than any game changers and we still see residential investment remaining a negative drag on 2024 GDP growth.

April 29, 2024

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China: Depreciation Rather Than Devaluation
Paying Article

April 29, 2024 1:00 PM UTC

We feel that a devaluation of the Yuan is unlikely in 2024, both to avoid potentially politically destabilizing capital outflows but also to avoid upsetting the next U.S. president.  Policy is geared more towards controlled depreciation to help competiveness but reduce other risks.  The Yuan has a

April 26, 2024

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U.S. March Personal Income and Spending - Q1 totals confirmed, Core PCE Prices provide some relief
Paying Article

April 26, 2024 1:12 PM UTC

March’s personal income and spending data confirms the Q1 totals released with the GDP report. Core PCE prices at 0.3% provide some relief by avoiding the 0.4% implied by Q1’s stronger than expected 3.7% annualized rise. March rose by 0.317% before rounding with revisions to February (to 0.266%

April 24, 2024

U.S. March Durable Goods Orders - Underlying trend still near flat
Paying Article

April 24, 2024 12:51 PM UTC

March durable goods orders are in line with expectations with a 2.6% increase overall, 0.2% ex transport, keeping trend near flat, with non-defense capital ex aircraft seeing similarly modest 0.2% increases in both orders and shipments. 

April 22, 2024

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Short-end European Government Bonds Following U.S. But June Decoupling
Paying Article

April 22, 2024 1:15 PM UTC

The Fed’s shift to higher for longer has spilled over to drag European government bond yields higher through April.  This now looks overdone as a June ECB rate cut is not fully discounted and ECB officials/data clearly point towards a 25bps cut.  UK money markets are more out of line, with a Jun

April 18, 2024

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China and the South China Sea
Paying Article

April 18, 2024 2:00 PM UTC

 Bottom Line: A China coastguard vessel blocked two Philippines government vessels over the weekend in the Second Thomas shoal area near the Philippines, which has raised questions over whether the South China Sea will be another geopolitical flashpoint.  We would say not in 2024, both given China