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July 9, 2025 9:37 AM UTC
It remains unclear just how much of a movable feast the new U.S. tariff deadline of Aug 1 actually is. Trade deals with the US were supposed to be agreed by today, or face the reciprocal tariffs as outlined in April. But that has now been deferred to, with US Treasury Secretary Bessent, hinting ac
July 7, 2025 5:35 PM UTC
There are nineteen FOMC dots. Seven hawks expect no easing this year, and two expect only one 25bps move. Eight are on the median seeing two 25bps moves, while two doves are looking for three. While only two have clearly signaled what their personal dot is, reasonable estimates can be made to identi
July 4, 2025 9:00 AM UTC
Last October, China’s government support package has helped turn residential property less negative and our baseline is that residential property will likely deduct around 0.75% from 2025 growth and 0.5% from 2026. However, the risks for the economy could turnout worse than our baseline view on
July 3, 2025 2:25 PM UTC
June’s ISM services index of 50.8 from 49.9 has rebounded above neutral after falling to 49.9 in May but is still quite subdued. Detail shows bounces from weakness in May in business activity and new orders but slippage in employment and delivery times restrained the composite.
July 3, 2025 1:09 PM UTC
June’s non-farm payroll is surprisingly strong overall with a rise of 147k, with 16k in net upward revisions, but private payrolls at 75k are weaker than expected, with 16k in net negative revisions. Unemployment unexpectedly fell to 4.1% from 4.2%, but average hourly earnings are weaker than expe
July 3, 2025 12:24 PM UTC
The account of the June 3-5 Council meeting just about left the door open for a move at the July 24 policy verdict given the array of news (probably negative particularly regarding tariffs but also bank lending) due beforehand. But the account adds to the impression we has initially that a pause
July 3, 2025 9:30 AM UTC
The U.S. equity market has returned to be clearly overvalued on equity and equity-bond valuations measures and is vulnerable to a new correction in H2 on any moderate bad news (e.g. further economic slowing and corporate earnings downgrades). In contrast, U.S. Treasuries are at broadly fai
July 2, 2025 8:30 AM UTC
We are concerned that DM central banks are underestimating the lagged impact of 2021-23 tightening and ongoing QT, which impacts the transmission mechanism of monetary policy. Central banks need to consider cyclical and structural issues, but also need a more rounded view of the stance and implica
July 1, 2025 12:55 PM UTC
Our central scenario (but less than 50%) is towards a scenario of compromise, with some agreements in principle or trade framework deals, delays for most other negotiating in good faith but with one or two countries seeing a reciprocal tariff rise e.g. Spain and/or Vietnam. This could still be fol
July 1, 2025 9:32 AM UTC
Despite its updated its monetary policy strategy detailed yesterday, inflation – now at target – is very much a side issue for the ECB at present, albeit with oil prices possibly accentuating Council divides. Admittedly, the flash June HICP rose a notch to 2.0% matching the -consensus, but up
June 30, 2025 7:30 AM UTC
· Japan, S Korea and Australia could eventually agree to some extra commitment to increase (self) defence spending in the next 5-10 years though perhaps not targets like NATO countries. This could come as part of the trade deal negotiations currently underway. Japan and S Korea
June 27, 2025 12:59 PM UTC
May’s core PCE price index, while not alarming, is at 0.2% a little firmer than expected, with yr/yr growth rising to 2.7% from an upwardly revised 2.6% (from 2.5%) in April. Personal income and spending data is weak, down by 0.4% and 0.,1% respectively.
June 27, 2025 6:56 AM UTC
Banxico has cut by 50bps to 8.00%, while also signalling in its statement that further easing will now be data dependent. Our forecast is for easing to move to a 25bps pace and to come once a quarter – most likely in September and December. Some improvement in the monthly inflation trajectory woul
June 26, 2025 2:25 PM UTC
We expect a 0.1% rise in May’s core PCE price index, matching to core CPI, continuing to show limited tariff pass-through. Subdued data are also likely from personal income, which we expect to be unchanged, and personal spending, where we expect a 0.1% decline. Downward revisions to Q1 income and
June 25, 2025 8:05 AM UTC
· The Chinese Yuan (CNY) will likely remain stable while trade negotiations with the U.S. continue. We see a trade deal in our baseline (probably Q4) and then a small rise in CNY v USD due to general USD weakness.
· In terms of total returns for the remainder of 2025, th
June 25, 2025 7:20 AM UTC
· President Donald Trump still wants to use the tariff tool, and we see the eventual average tariff rate being in the 13-15% area, lowered by deals but increased by more product tariffs. Any lasting legal block on reciprocal tariffs will likely see the administration pivoting towards ot
June 24, 2025 6:06 PM UTC
While two Fed Governors. Waller and Bowman, have suggested a July easing could be appropriate, testimony from Chairman Powell suggests a move that early is unlikely, though September is possible if inflation data continues to show a lack of feed through from tariffs. We, and Powell, expect some acce
June 24, 2025 8:57 AM UTC
Inflation – now below target – is very much a side issue for the ECB at present, albeit with oil prices possibly accentuating Council divides. Indeed, we see the flash June HICP staying at May’s below-consensus, eight-month low and below-target 1.9% (Figure 1). More notably, having jumped
June 24, 2025 8:15 AM UTC
Though the U.S. equity market has rebounded, we still scope for a fresh dip H2 2025 to 5500 on the S&P500 as hard data softens further to feed into weaker corporate earnings forecasts and CPI picks up and delays Fed easing. However, the AI story is still a positive, while share buybacks
June 24, 2025 7:05 AM UTC
· Bottom Line: After making initial gains after the election, the USD has followed a similar path to the first Trump presidency, falling back steadily this year as optimism on the economy has faded, with the introduction of tariffs contributing to more negative sentiment. Much as in the
June 23, 2025 3:17 PM UTC
A measured or modest Iran retaliation could be used by the U.S. to seek a path back towards negotiation. Israel would likely want to continue to degrade Iran nuclear and military facilities, but the U.S. could eventually pressure Israel to stop. This is our baseline, though the military attac
June 23, 2025 8:30 AM UTC
• We see the U.S. yield curve steepening in the next 6-18 months. 2yr U.S. Treasury yields can step down with cautious Fed easing on a modest/moderate growth slowdown and also if the Fed keeps an easing bias in H2 2026. 10yr U.S. Treasury yields face a tug of war between lower short-dated y
June 20, 2025 2:14 PM UTC
• Policy uncertainty remains high and final details of the tariffs will depend on the decisions of the courts as well as those of President Trump. However the magnitude of the tariffs is becoming easier to predict than the detail. Trump looks set to insist on a minimum average tariff of at