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March 31, 2025

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U.S. Trade Surplus Countries: No Special Treatment?
Paying Article

March 31, 2025 9:04 AM UTC

Quick dilutions of tariffs or exemption will likely be slow in coming for countries that the U.S. has trade surpluses with, as the Trump administration are currently more focused on tariffs for tax revenue and trying to switch production back to the U.S. than trade deals.  Trade policy uncertainty

RBA Preview: Favors CPI in Mid Range, No Imminent Cut
Paying Article

March 31, 2025 2:00 AM UTC

The RBA meeting on April 1st will keep rates at 4.1% and indicates no imminent cut

March 28, 2025

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U.S. February Core PCE Prices firm, Income outpaces Spending again
Paying Article

March 28, 2025 12:58 PM UTC

February’s core PCE price data at 0.4%, 0.365% before rounding) has come in considerably stronger than the 0.2% core CPI though the 2.8% yr/yr pace, with January revised up to 2.7% from 2.6%, is in line with a forecast from Fed’s Powell. Personal income was surprisingly strong with a 0.8% increa

March 27, 2025

Preview: Due March 28 - U.S. February Personal Income and Spending - Core PCE Prices to outperform Core CPI
Paying Article

March 27, 2025 2:42 PM UTC

We expect a 0.3% rise in February’s core PCE price index, ahead of a 0.2% core CPI to partially offset a January underperformance when core PCE prices rose by 0.3% while core CPI surged by 0.5%. We also expect a subdued 0.1% rise in personal income to follow a strong 0.9% increase in January but p

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Car Tariffs Then Lenient Reciprocal Tariffs?
Freemium Article

March 27, 2025 8:59 AM UTC

   The 25% tariffs on cars underlines that tariffs are not just about getting better trade deals, but in Trump’s view raising (tax) revenue and trying to shift production back to the U.S. Combined with other tariffs being implemented, plus policy uncertainty, we see a moderate overall hit from t

March 26, 2025

U.S. February Durable Goods Orders - Strong month may be difficult to sustain
Paying Article

March 26, 2025 1:06 PM UTC

February durable goods orders are stronger than expected with a 0.9% rise overall and a 0.7% rise ex transport. This may be a response to strength in January ISM manufacturing orders, but slower ISM data for February suggests the February durable goods orders gain may be difficult to sustain.

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Charting Our Views: Technical Analysis for Q2 2025
Paying Article

March 26, 2025 10:53 AM UTC

Our latest quarterly technical analysis views on Bonds, Equities, Commodities and FX is now available.  

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Outlook Overview: Navigating the Turbulence
Paying Article

March 26, 2025 9:30 AM UTC

·       More tariffs will arrive from the U.S. from April with product (car, pharma, semiconductors and lumber) and reciprocal tariffs. President Trump has a 3-part approach to tariffs to raise (tax) revenue; bring production back to the U.S. and get fairer trade deals.  This means some of t

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EMFX Outlook: Divergence versus the USD
Paying Article

March 26, 2025 9:16 AM UTC

EM currencies will be helped by the ongoing USD downtrend against DM currencies, but prospects also depend on relative inflation differentials versus the USD and starting point in terms of valuations.  The Brazilian Real (BRL), Mexican Peso (MXN) and Indonesian Rupiah (IDR) should all make modest s

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Equities Outlook: Turbulence Ahead
Paying Article

March 26, 2025 9:05 AM UTC

·       U.S. trade wars will likely hurt U.S. growth and raise inflation, with only small to modest Fed easing and a 10yr budget bill that will likely be neutral to negative for the economy.  With valuations still very high (Figure 1), we see scope for a correction to extend into mid-year th

March 25, 2025

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BCB Minutes: Caution Rather than Optimism
Paying Article

March 25, 2025 10:51 PM UTC

The Brazilian Central Bank (BCB) raised the policy rate by 100bps to 14.25% amid signs of economic deceleration, including slower growth, job creation, and consumption. The BCB highlighted external uncertainties, such as U.S. trade policy, and domestic challenges with rising inflation. It emphasized

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German & EZ HICP Preview (Mar 31/Apr 1): Headline Edges Lower Again With Friendlier Services Messages?
Freemium Article

March 25, 2025 1:43 PM UTC

February HICP inflation numbers did deliver better news and broadly and less marginally so after revisions with the headline dropping 0.2 ppt to an as-expected 2.3%.  This ended a run of three successive rises and came about despite a rise in food inflation.  Regardless, the core also eased 0.1 pp

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DM Rates Outlook: Policy Divergence
Paying Article

March 25, 2025 9:30 AM UTC

 •    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. 10yr U.S. Treasury yields can be helped by this easing and see a move down through 2025.  However, the budget deficit will likely be 6.5-7.0%

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DM FX Outlook: USD under pressure as Trump policies disappoint
Paying Article

March 25, 2025 8:51 AM UTC

·       Bottom Line: The market had expected the Trump presidency to see further fiscal expansion and consequent tight Fed policy and high US yields. But the combination of less tax cuts than previously expected and more aggressive tariff increases have led to reduced expectations for US grow

March 24, 2025

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U.S. Outlook: How Much Damage Will a Trade War Do?
Paying Article

March 24, 2025 3:45 PM UTC

•    The U.S. economy, consumer spending in particular, ended 2024 looking healthy, but with inflation still above its 2.0% target if well off its highs. The Trump administration’s more aggressive than expected trade war has made a return to the inflation target more difficult and raised dow

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China Outlook: Construction and Trade Headwinds v Policy Stimulus
Freemium Article

March 24, 2025 9:00 AM UTC

   We look for 4.5% GDP growth in 2025.  Though residential property investment will subtract less from GDP growth, net exports will also be a drag on the economy in 2025 due to the trade war with the U.S.  Further fiscal stimulus beyond March’s NPC measures will be required to achieve a 5% GD

March 21, 2025

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Trump Product and Reciprocal Tariffs
Paying Article

March 21, 2025 9:00 AM UTC

It appears that we will get bad news from April 2 on extra tariffs before any good news.  Firstly, the announcement effect of tariffs for many countries and extra products will hurt U.S. business and consumer sentiment.  Secondly, part of the reason for tariffs is extra tax revenue and to try to s

March 20, 2025

Bank Indonesia Holds Steady Amid Fiscal Fears and Rupiah Rout
Paying Article

March 20, 2025 7:49 AM UTC

Bank Indonesia has decided to maintain its benchmark interest rate at 5.75%, reflecting a cautious stance amid the rupiah's depreciation and mixed economic signals. With the rupiah near five-year lows and influenced by external uncertainties, the central bank is balancing the need to support economi

March 19, 2025

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BCB Review: Confirming More Hikes
Paying Article

March 19, 2025 10:38 PM UTC

The Brazilian Central Bank (BCB) raised the policy rate by 100 bps to 14.25% and signaled further hikes, likely reaching 15.0% by May, potentially ending the current tightening cycle. The BCB emphasized inflation concerns and strong economic activity, suggesting a hawkish stance. Fiscal policy was n

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Fed: Cautious Policy Due To Uncertainty
Paying Article

March 19, 2025 7:26 PM UTC

The Fed do not appear to be in a hurry to cut interest rates, both as economic momentum remains reasonable and as the Fed waits to see how Trump administration policy feedthrough – especially tariffs to inflation. This suggests that the Fed will need to see a weaker economy and we pencil in one 25

Chartbook: Chart USD Index DXY: Lower in range - studies under pressure
Paying Article

March 19, 2025 1:32 PM UTC

The anticipated break higher has reached strong resistance at the 109.00 Fibonacci retracement and psychological resistance at 110.00

March 18, 2025

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Uncertainty Over Pace and Scale of Extra European Defense Spending
Paying Article

March 18, 2025 9:05 AM UTC

·       The crucial date for more clarity is the June 24-26 NATO summit.  Donald Trump might attend but will ask for more spending.  NATO head Rutte’s desire is for above 3% of GDP for NATO countries, but the politics and budget suggest that a 2.5% minimum may only be agreed with Germany

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BoJ Preview: Placeholder Meeting
Freemium Article

March 18, 2025 12:00 AM UTC

The BoJ will not change rate nor forward guidance in the March meeting.

March 17, 2025

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Preview: Due March 28 - U.S. February Personal Income and Spending - Core PCE Prices to outperform Core CPI
Paying Article

March 17, 2025 4:15 PM UTC

We expect a 0.3% rise in February’s core PCE price index, ahead of a 0.2% core CPI to partially offset a January underperformance when core PCE prices rose by 0.3% while core CPI surged by 0.5%. We also expect a subdued 0.1% rise in personal income to follow a strong 0.9% increase in January but p

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U.S. February Retail Sales - Q1 looking subdued, but reasons unclear
Paying Article

March 17, 2025 12:58 PM UTC

February retail sales with a gain of 0.2% overall is unimpressive, particularly with January revised down to -1.2% from -0.9% while gains of 0.3% ex auto and 0.5% ex auto and gas fail to reverse respective January decline of 0.6% and 0.8%. However the control group, which contributes to GDP, with a

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China: Mixed Early 2025 Data and Policy Stimulus
Paying Article

March 17, 2025 9:17 AM UTC

Headline industrial production and retail sales were better than expected, but the breakdown of the data shows a mixed picture for consumption and residential investment remains a negative drag on GDP before the 20% U.S. tariffs hits.  Meanwhile, though the weekend policy announcement on boosting d

Bank Indonesia Policy Review: Rate Pause As BI Remains Watchful
Freemium Article

March 17, 2025 6:45 AM UTC

Bank Indonesia's upcoming monetary policy decisions will hinge on a delicate balance of domestic economic indicators and global financial conditions. With a focus now tilted slightly more towards economic growth than in previous years, BI could surprise markets with its timing and decisions, dependi

March 14, 2025

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Germany: Breakthrough in Attempt to Unlock Debt Brake?
Paying Article

March 14, 2025 12:08 PM UTC

It does seem as if effective German Chancellor-elect Merz now has enough parliamentary support to amend the so-called debt brake and unlock more spending and borrowing to be directed toward added defense and infrastructure.  Thus, it does seem as if Germany and its economy are undergoing a sea-chan

March 13, 2025

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Trump’s Policies and U.S. Equities
Paying Article

March 13, 2025 8:35 AM UTC

Models would suggest that the current and prospective direct tariff impact should slow GDP growth to a 1.5% pace, which should see slow Fed easing in 2025 given the boost to inflation. However, the policy uncertainty means that business and consumer behaviour could see a large adverse hit that keeps

March 12, 2025

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FOMC Preview for March 19: No change and few clear signals given exceptional uncertainty
Paying Article

March 12, 2025 6:46 PM UTC

In the current exceptionally uncertain environment, the FOMC looks set to keep rates unchanged at 4.25-4.5% at its March 19 meeting, and give little away on future policy. The dots will be closely watched but we expect they will change little from January 29. Powell is likely to stress at the press

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U.S. February CPI - Renewed progress, but threatened by tariffs
Paying Article

March 12, 2025 12:58 PM UTC

February CPI is softer than expected with gains of 0.2% both overall and ex food and energy, with the ex food and energy rate up by 0.227% before rounding. Coming after a strong January conclusions should be cautious, while upcoming months may be lifted by tariffs. However, the data will come as a r

March 11, 2025

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China: PBOC Slow Cuts with 5% Nominal GDP
Paying Article

March 11, 2025 8:45 AM UTC

•    The PBOC will likely cut slowly and gradually, as China seeks to avoid Yuan depreciation that could worsen the trade war with the U.S.  Additionally, MOF last week forecast nominal GDP of 5%, which with a real GDP target of 5% means that MOF is also forecasting zero inflation.  Close to

March 10, 2025

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Trump and Dollar Policies
Paying Article

March 10, 2025 6:04 AM UTC

   The Trump administration could decide to more broadly talk the USD down or less likely try to reach a cooperative Mar A Lago accord with big DM and EM countries. A more cohesive alternative is a forced currency deal for countries to appreciate their currencies to avoid more tariffs and withdraw

March 07, 2025

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U.S. February Employment - Detail mostly on weak side of trend
Paying Article

March 7, 2025 1:54 PM UTC

February’s non-farm payroll with a 131k increase in not far from consensus with near neutral back revisions, but does suggest momentum is slowing in Q1, though probably in part on weather. Other detail is on the soft side, with average hourly earnings up 0.3% with net negative revisions, and the w

March 06, 2025

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ECB Review: Disinflation Still On Track But Policy now ‘Work in Progress’
Paying Article

March 6, 2025 3:01 PM UTC

Unsurprisingly, the ECB verdict was less important that the rhetoric. A sixth 25 bp discount rate was widely expected – and delivered - to 2.5%, but how wide the door is left open for further cuts may be more opaque.  This both reflects gauging the extent of any lingering degree of policy restric

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China: Only Moderate Fiscal Stimulus
Freemium Article

March 6, 2025 7:55 AM UTC

China announced some fiscal stimulus to help meet the expected 5% GDP target for 2025.  Overall, we have not been surprised by the fiscal stimulus measures announced so far from the March NPC, that have been towards the lower end of expectations.  However, officials on Thursday have hinted that mo

March 05, 2025

U.S. February ISM Services - Still resilient
Paying Article

March 5, 2025 3:19 PM UTC

After the alarmingly weak preliminary S and P services PMI of 49.7 was revised up to a marginally positive 51.0, February’s ISM services index picked up to a stronger than expected 53.5 from 52.8, a pace that suggests continued respectable growth, in line with recent trend.

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Mexico: Uncertainty Mounts as Tariffs Are Imposed
Paying Article

March 5, 2025 2:43 PM UTC

Trump's administration has moved forward with 25% tariffs on Mexican imports, citing drug trafficking and migration issues. Mexico’s President Sheinbaum has stated retaliatory measures will be announced on March 9. The tariffs could push Mexico into recession in 2025, although we forecast growth a

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EZ Bilateral Trade Nuances with the U.S. – Its Imports Not Exports
Paying Article

March 5, 2025 12:56 PM UTC

As the EU/EZ prepares for an almost certain trade spat if not trade war with the U.S. as the latter levies well-flagged and probably significant tariffs, we consider what is actually behind President Trump’s ferocity regarding bilateral trade.  As has been suggested widely, the EZ does not actual

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Germany Attempts to Unlock Debt Brake
Freemium Article

March 5, 2025 7:42 AM UTC

Germany’s likely new Chancellor Friedrich Merz has (and as has been flagged since his election win last week) announced plans to amend the country’s constitutional fiscal restraints, the so-called debt brake and within the confines of the current parliament.  Merz said Tuesday evening the motto

March 04, 2025

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Asia Country Risk Ratings
Paying Article

March 4, 2025 11:00 AM UTC

We provide country risk reviews for Asia countries including China, India, Indonesia, Taiwan, Singapore and Thailand.  

March 03, 2025

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EZ HICP Review (Mar 3): Headline Edges Lower With Friendlier Services Messages?
Freemium Article

March 3, 2025 4:17 PM UTC

February HICP inflation numbers may did deliver better news and broadly but only marginally so (Figure 1) with the headline dropping 0.1 ppt to a higher-than-expected 2.4%.  This ended a run of three successive rises and came about despite a rise in food inflation.  Instead, the core also eased’

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EM Europe and CIS: Select Country Risk Ratings
Paying Article

March 3, 2025 11:00 AM UTC

We provide country risk reviews for EM Europe/CIS countries including Russia and Ukraine. 

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Trump Tariffs and U.S. Business and Consumer Sentiment
Paying Article

March 3, 2025 9:02 AM UTC

 •    Mexico and Canada are trying to frantically find solutions to delay across the board tariffs again, though the U.S. is hinting that the rate could be less than 25%.  China extra 10% tariff remains likely, as the U.S. increases trade pressure on China.  More tariffs also remain highly

February 28, 2025

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Mexico: Labour Market Decelerating as Expected
Paying Article

February 28, 2025 5:53 PM UTC

Mexico's labor market remains strong with an unemployment rate of 2.7%, but signs of deceleration are emerging. Worker affiliation to the pension system and wage growth are slowing, and some job creation stagnation is expected, potentially pushing the unemployment rate above 3%. A technical recessio

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U.S. January Core PCE Prices as expected, special factors bring some surprises elsewhere
Paying Article

February 28, 2025 2:07 PM UTC

January’s PCE price data, up 0.3% both overall and core (0.325% and 0.285% respectively before rounding) is in line with expectations, but significantly less alarming than the respective CPI gains of 0.5% and 0.4%. There were some surprises elsewhere, with income sharply ahead of spending and a ma

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Sub Sahara Africa: Country Risk Ratings
Paying Article

February 28, 2025 11:00 AM UTC

We provide country risk reviews for Sub Sahara Africa countries including South Africa and Ethiopia.  

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China: How Much U.S. Trade and Taiwan Pressure?
Paying Article

February 28, 2025 9:05 AM UTC

·       Trump eventually wants a trade deal with China and this could occur by the end of 2025, but the U.S. will ask for penalties if targets for U.S. imports to China are not met and this will lead to difficult negotiations. Reciprocal and product specific tariffs on China are also likely i

February 27, 2025

Preview: Due February 28 - U.S. January Personal Income and Spending - Core PCE Prices to underperform Core CPI
Paying Article

February 27, 2025 3:53 PM UTC

We expect a 0.3% rise in January’s core PCE price index, slower than the 0.4% seen from core CPI, while we expect a modest 0.3% rise in personal income to outpace an unusual 0.1% decline in personal spending.

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ECB Preview (Mar 6): Gauging Restrictiveness as Policy to be Eased Further
Paying Article

February 27, 2025 1:55 PM UTC

As has been the case at most recent Council meetings, the ECB verdict is less important that the rhetoric. A sixth 25 bp discount rate is widely expected, to 2.5%, but how wide the door is left open for further cuts may be gleaned from any clear change in regard to how near(er) neutral policy the Co