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Trump 2.0: Markets Guessing Policy Priorities

July 18, 2024 9:10 AM UTC

 If Trump is elected president we still feel that the top priorities for implementation will likely be reducing immigration and making permanent tax cuts that are due to lapse in 2025. Trump would likely jawbone on all issues, but actual policy changes are more important for persistent moves in mar

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June Outlook: Cyclical and Structural Forces
Paying Article

June 26, 2024 7:58 AM UTC

The 15 chapters of our June Outlook have now been published.  See the headlines and weblinks enclosed for links to the articles on economic, policy and markets for the 23 countries that we cover

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Outlook Overview: Cyclical and Structural Forces
Paying Article

June 25, 2024 10:15 AM UTC

•    The global economy is showing signs of healing, as inflation comes back towards targets and growth recovers momentum in some economies. Nevertheless, the cyclical headwind of lagged monetary tightening remains in DM countries, and will likely be one of the forces slowing the U.S. economy

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UK Election Aftermath: Labour’s Solid Victory
Paying Article

July 5, 2024 5:24 AM UTC

Labour have won a large seat majority, though with a modest vote share.  This should provide political stability in the UK for the next 5 years.  The key question for market remains how the fiscal rule will be meet and how slowly or quickly Labour will take actions to boost long-term growth. 

Chart USD/CAD Update: Prices under pressure
Freemium Article

July 10, 2024 3:27 PM UTC

Cautious trade beneath congestion resistance at 1.3650 is giving way to a drift lower

Chart EUR/PLN Update: Limited tests higher
Paying Article

July 2, 2024 11:26 AM UTC

Cautious trade around congestion support at 4.3000 has given way to a bounce

Continuum Economics Calendar July 2024
Paying Article

June 26, 2024 10:52 AM UTC

Data and Events Calendar July 2024.

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UK Markets After The Election: Will Labour Push for Growth Slowly or Quickly?
Paying Article

June 28, 2024 7:14 AM UTC

It is uncertain whether an incoming Labour government in the UK would slowly or quickly take action to boost trend growth and this is the most important question for post-election sentiment towards UK assets.  For the Gilt market, the key is that the BOE actually starts cutting rates and that the 1

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Equities Outlook: Choppy U.S. and Outperformance Elsewhere
Paying Article

June 25, 2024 7:05 AM UTC

 •    U.S. equities are overvalued and waiting for earnings growth to catch-up, which leaves the market choppy, directionless and vulnerable to intermittent 5% corrections. Our forecast slowing of the U.S. economy before Fed rate cuts or nervousness about the post-election prospects are potenti

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EZ: Is the Labor Market Starting to Labor?
Freemium Article

July 3, 2024 10:51 AM UTC

With markets and policy makers very much focused on inflation, the EZ labor market continues to shine – apparently! Indeed, the EZ jobless rate has remains at a record-low of 6.4%, hinting at labor market tightness that will perturb ECB hawks wary of higher ensuing wage pressures.  But this appar

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Trump now Front-Runner for President
Paying Article

July 3, 2024 9:00 AM UTC

There is little sign yet that President Joe Biden is willing to step down after his disastrous debate performance though opinion polls will need to be watched for signs that the Democrats could do better with another candidate. The debate has left former President Donald Trump as the more likely, bu

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LatAm Outlook: Pausing the Cuts
Paying Article

June 24, 2024 6:00 PM UTC

·       Brazil and Mexico growth will decelerate from the growth rates in 2023. The stronger basis of comparisons in 2023 and the tight monetary policy will diminish growth during 2024. Brazil robust Agricultural growth will not repeat in 2023 while Mexico is on the limit of growing due to a

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France Gets PPP - Protracted Policy Paralysis?
Freemium Article

July 8, 2024 6:46 AM UTC

French politics is getting used to surprises.  After the unexpected snap election that saw the far right poll the most in the first round of parliamentary results last week, Sunday’s second round surprisingly saw President Macron's centrist forces perform more strongly than expected by coming in

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China: Weak CPI and M2 Trends
Paying Article

July 10, 2024 7:27 AM UTC

China disinflation process is clear in the June CPI data, with excess production and soft consumer spending producing a lower than expected outcome.  Combined with weak M2 money growth, parts of China economy remain weak and point to a softening of GDP growth in H2.  However, policy action will li

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Western Europe Outlook: Easing Cycles Diverge?
Paying Article

June 24, 2024 7:48 AM UTC

·       ·       In the UK, while downside economic risks may have dissipated, the real economy backdrop and outlook is still no better than mixed.  This should accentuate a disinflation process hitherto driven mainly by friendlier supply conditions. The BoE will likely ease in Q3 and

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ECB: Council Policy Reservations Deeper Than Expected?
Freemium Article

July 4, 2024 12:23 PM UTC

The account of the June ECB Council meeting confirmed one dissent against the widely flagged 25 bp rate cut but also revealed perhaps clearer reservation among some other members about easing at that juncture.  Indeed, there seemed to be disagreement about interpreting data; what is the basis for a

Inflation Heatwave: India's CPI and WPI Climb
Freemium Article

July 15, 2024 6:35 PM UTC

India's inflation surged in June with wholesale prices hitting a 16-month high at 3.36% y/y, driven by soaring food costs. The CPI also rose to 5.1% y/y, reversing a five-month decline, prompting caution from the RBI, which anticipates inflation to ease as seasonal factors stabilise. Governor Shakti

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U.S. June CPI - Very soft, even if a few components look erratic
Paying Article

July 11, 2024 1:04 PM UTC

June CPI is even weaker than expected, down by 0.1% overall and up by only 0.1% ex food and energy, with the core increase before rounding only 0.065%, a sign that inflationary pressures have faded significantly since the bounce at the start of the year. Initial claims at 222k from 239k suggest the

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EM After the Elections: Fiscal Focus and Inflation Questions
Paying Article

July 1, 2024 8:05 AM UTC

Enhancing fiscal credibility is key post-election in India and S Africa, but also for Brazil.  India, will do this in the 3 week of July, but S Africa needs to move from ANC/DA led coalition optimism to reality quickly. Brazil needs to stop the vicious circle of sentiment building up on fiscal slip

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EMEA Outlook: Stubborn Inflation Dominates
Paying Article

June 24, 2024 1:00 PM UTC

·     In Turkiye, we expect Central Bank of Republic of Turkiye (CBRT) will likely halt the key rate at 50% until the end of 2024, which is our baseline scenario. We expect a fall in inflation likely after July due to favorable base effects, additional macro prudential measures, public savings

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DM Rates Outlook: Rate Cuts Arrive Except Japan
Paying Article

June 24, 2024 8:45 AM UTC

•    For U.S. Treasuries we see a steady easing process from the Fed from September, which can allow 2yr yields to fall consistently.  However, the decline in H2 2024 will be slower at the long-end from traditional yield curve steepening pressures and then we see fiscal stress in H1 2025 unde

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DM FX Outlook: Politics rears its head
Paying Article

June 24, 2024 7:42 AM UTC

·       Bottom Line: The USD strength in Q2 on the back of a less dovish view of the Fed is unlikely to extend over the rest of the year. The JPY remains exceptionally cheap and has potential to recover sharply if risk appetite weakens. A slower JPY recovery is likely if lower inflation leads

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ECB Review: Policy Window Stays Very Open
Freemium Article

July 18, 2024 1:56 PM UTC

Maybe the ECB is now thinking that it was too clear at its April Council meeting that rate cut would occur subsequently in June, basically then suggesting that something would have to occur to prevent such a move.  This time, with policy rates held as very much expected, the policy window was merel

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U.S. Household Wealth: Bottom 50% Need Income
Paying Article

July 17, 2024 9:00 AM UTC

Beneath the surface Federal Reserve data shows that the bottom 50% of households have little net wealth and they depend on employment income and government handouts.  With excess post COVID government handouts having been largely exhausted, lower income households are starting to suffer from slowin

UK CPI Review: Inflation Stays at Target and Services Stay Resilient?
Freemium Article

July 17, 2024 6:35 AM UTC

As has been made clear by policy-makers, labor market and particularly CPI data are crucial to BoE thinking about the timing and even the existence of any start to an easing cycle.  In this regard the fact that headline CPI inflation dropped back to the 2% target in May is important but far from de

Eurozone Banks See Consumer Loan Demand Recover
Freemium Article

July 16, 2024 8:58 AM UTC

There were more positive straws in the wind in the latest (July 2024) bank lending survey (BLS), providing some reassurance for the ECB ahead of this week’s Council meeting. Most notable was a reported increase in demand for both housing loans and consumer credit for the first time since 2022 and

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EZ and UK Government Bonds: Decoupling From the U.S.?
Paying Article

July 12, 2024 9:37 AM UTC

Different economic and inflation dynamics, plus no constraint from trade weighted exchange rates, means that the ECB and BOE can cut irrespective of the Fed in the coming quarters.  This can see 2yr yields decline, though less so in Germany where a 2.5% ECB depo rate is already discounted.  10yr y

Chart EUR/USD Update: Consolidating
Paying Article

July 10, 2024 7:32 AM UTC

Still little change, as mixed intraday studies keep near-term sentiment cautious

U.S. Fed's Powell - More good data would strengthen confidence inflation heading to target
Paying Article

July 9, 2024 2:14 PM UTC

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U.S. June Employment - Consistent with an economy growing below potential
Paying Article

July 5, 2024 12:59 PM UTC

June’s non-farm payroll is slightly stronger than expected in the overall gain of 206k, but with significant negative back month revisions of 111k, while private sector payrolls rose by a weaker than expected 136k. With average hourly earnings up a moderate on consensus 0.3% and unemployment up to

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China: 3rd Plenum Incremental Not Game Changing
Paying Article

July 2, 2024 8:10 AM UTC

The 3 plenum July 15-18 will likely see some additional measures that will support or stimulate China economy.  However, they are unlikely to be game changers, such as a Yuan2-4trn program of buying most unsold homes or structural increase in the unemployment/health and pension safety nets to free

FX Weekly Strategy: July 1st-5th
Paying Article

June 28, 2024 3:18 PM UTC

US employment report and French and UK elections are the event highlights
Reaction to elections likely to be muted
Mild USD downside risk on employment report
JPY remains in the spotlight

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Charting Our Views: Technical Analysis for Q3 2024
Paying Article

June 25, 2024 9:08 AM UTC

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

North American Summary and Highlights 24 June
Freemium Article

June 24, 2024 7:42 PM UTC

Overview - It was a generally quiet day apart from a brief sharp decline in USD/JPY that was subsequently reversed. Otherwise the USD lost a little ground.  

Chart GBP/USD Update: Higher in range - daily studies improving
Freemium Article

July 3, 2024 7:33 AM UTC

The drift lower towards support at congestion around 1.2600 and the 1.2580 Fibonacci retracement has bounced

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Biden Drops Out, But Yield Curve Still to Steepen
Paying Article

July 22, 2024 8:10 AM UTC

President Joe Biden dropping out will create more uncertainty about the U.S. presidential race, but also crucially mean that the House of representative race is a close call.  This could stall some Trump trades, though we still see a swing to a positive 10-2yr U.S. Treasury yield curve – given Fe

U.S. Initial Claims rebound from a dip but July Philly Fed looks positive
Paying Article

July 18, 2024 1:01 PM UTC

Initial claims at 243k have bounced to the highest level since a matching number five weeks ago from last week’s 223k which was a six week low, restoring signs of labor market slowing. However July’s Philly Fed manufacturing index at 13.9 versus 1.3 is stronger than expected and backs some posit

Prabowo's Economic Vision: Ambitious Targets and Fiscal Debates for 2025
Freemium Article

July 15, 2024 4:22 PM UTC

Indonesia's parliament has set ambitious economic targets for 2025, tasking Bank Indonesia with strengthening the rupiah to USD/IDR 15,300-15,900.  The parliament also set a GDP growth target of 5.3-5.6% and a fiscal deficit target of 2.29-2.82% of GDP. Despite revising the 2024 fiscal deficit to 2

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Nigeria and South Africa: Country Risk Ratings
Paying Article

July 10, 2024 1:42 PM UTC

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

Psychology for major markets July 5th
Paying Article

July 5, 2024 10:11 AM UTC

EUR firmer after more dovish Powell comments and weak US data. JPY sentiment still negative in the absence of intervention. 

North American Summary and Highlights 3 July
Freemium Article

July 3, 2024 7:45 PM UTC

Overview - The USD slipped after weaker labor market and ISM services data, but finished off its lows.  

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EZ HICP Review (Jul 2): Disinflation Resumes Amid Services Resilience – July Cut Off Table?
Freemium Article

July 2, 2024 9:33 AM UTC

The clear disinflation trend was still evident even after higher and higher-than-expected May numbers, where the headline moved up from 2.4% to a three-month high of 2.6%.  That trend looks more discernible after the partial drop back to 2.5% seen in the June flash HICP, albeit with some far from r

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Webinar Recording June Outlook: Cyclical and Structural Forces
Paying Article

July 2, 2024 7:30 AM UTC

North American Summary and Highlights 1 July
Freemium Article

July 1, 2024 7:57 PM UTC

Overview - A subdued session saw the USD slightly higher as UST yields increased despite soft US data.  

Outlook Forecasts to download in Excel
Paying Article

June 26, 2024 10:30 AM UTC

Below is an Excel file that contains our headline forecasts for GDP, Inflation, Monetary Policy, and Exchange Rates.

Psychology for major markets June 26th
Paying Article

June 26, 2024 10:02 AM UTC

EUR stable near 1.07, JPY still weak

FX Daily Strategy: N America, June 25th
Paying Article

June 25, 2024 9:47 AM UTC

Canadian CPI the only data of note
Mild CAD downside risk
JPY approaching big levels, but period of consolidation seems likely

North American Summary and Highlights 19 July
Freemium Article

July 19, 2024 7:28 PM UTC

Overview - It was a quiet day for FX though GBP and CAD both saw some losses after weak retail sales data.  

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France in the Fiscal Firing Line
Freemium Article

July 16, 2024 7:31 AM UTC

EU finance ministers gather in Brussels today in a regular meeting but this time will discuss excessive fiscal deficits in various member countries, in particular, Belgium, France, Italy, Hungary and Poland.  It is unclear just how specific any criticisms will be either in pointing out particular c

FX Weekly Strategy: July 15th-19th
Paying Article

July 15, 2024 9:03 AM UTC

JPY the main focus after sharp gains Thursday and Friday
Key levels approaching with talk of intervention
EUR risks may be on the downside on ECB meeting
GBP strength could be challenged by UK data