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The Fed's Balance Sheet: Revolution or Recalibration
August 3, 2026 9:18 AM UTC
· Fed chair Warsh has reopened the question of how the Federal Reserve implements monetary policy, not just the size of the balance sheet. The two go hand in hand.
· The realistic choice is not between today's balance sheet and a return to 2006, but among several ways of o
AI Equities: Correction/Consolidation?
August 5, 2026 7:40 AM UTC
• Overall, we feel that recent movements have been a correction/consolidation in the AI equity story. AI specific revenue growth still remains healthy and will support multi-year plans over cloud computing growth and in turn semiconductor demand. Even so, slowing free cash flows and ove
Preview: Due August 7 - U.S. July Employment (Non-Farm Payrolls) - Stronger than June, but with a rise in unemployment
July 28, 2026 3:49 PM UTC
We expect July’s non-farm payroll to rise by 120k overall and by 110k in the private sector, a significant improvement from June’s respective gains of 57k and 49k but largely explained by a recovery in leisure and hospitality. We expect unemployment to rise to 4.3% from 4.2%, reversing a June de
From Hanging Chads to Hanging By a Thread – ‘Alternative’ US Election Risk Scenarios
August 17, 2026 9:22 AM UTC
* Without being alarmist, the market arguably needs to factor in the risk that the elections do not proceed smoothly to a clean conclusion. At the moment, there is no risk premia
* The markets hope that the destination is some degree of gridlock and thus reduction in extreme policy (albeit with mixed
Fresh U.S. Tariff Risks to Canada's Economy are Moderate
August 17, 2026 6:54 PM UTC
The US and Canada are approaching an August 19 deadline for the US to impose 50% tariffs on some Canadian exports. Tense negotiations are to be expected as the deadline approaches but a deal is far from certain. Many in the market may be expecting Trump to back down a few days after announcing the t
FOMC - Warsh leaves markets confused
July 29, 2026 7:30 PM UTC
That this FOMC meeting showed a 9-3 vote for unchanged policy, with the dissents being for tightening, shows there was a case for tightening and a case for steady policy. However, the press conference from Chairman Warsh gave little insight on the nature of the debate, talking a lot about how the Fe
Bessent’s Buybacks - bluster, bazooka or brittle bet?
August 25, 2026 3:57 PM UTC
* Bessent’s buybacks – bazooka or peashooter? It depends on whether it’s a slippery slope. On current proposed scale, possibly only absorbs around 10% or so of gross long end Treasury issuance on duration basis
* Mooted TGA use is not a free $1trn money pot, though it could provide some short-t
Preview: Due August 7 - U.S. July Employment (Non-Farm Payrolls) - Stronger than June, but with a rise in unemployment
August 6, 2026 1:27 PM UTC
We expect July’s non-farm payroll to rise by 120k overall and by 110k in the private sector, a significant improvement from June’s respective gains of 57k and 49k but largely explained by a recovery in leisure and hospitality. We expect unemployment to rise to 4.3% from 4.2%, reversing a June de
Escalation Risk in U.S.-Canada Trade Dispute
August 24, 2026 3:11 PM UTC
The immediate economic impact of the collapse of the US-Canada trade talks is likely to be modest, but not insignificant in the case of Canada. Where things move from here is uncertain, with Canadian retaliation due to be implemented on September 8, and risk of further mutual escalations after tha
Running on Empty - Low Rivers could add to Europe’s Supply Squeeze
August 19, 2026 9:30 AM UTC
* Drought is not only directly impacting water-dependent activity, fire damage, and food crops. It is also seeing extreme low river levels across the major Rhine–Danube/Central-European industrial corridor
* That can significantly impact freight flow, adding to costs and disrupting industrial produ
Taylor Rules for Uncertain Times
August 11, 2026 2:44 PM UTC
* The Fed’s rate puzzle has three awkward-shaped pieces: which inflation measure to trust, how much slack remains, and where r* now sits.
* Taylor rules may be deeply unfashionable, but they force those hidden assumptions into the open.
* Change only the inflation measure and the same rule can make
Slicing and dicing US inflation – why different measures are at the centre of Fed debate
August 10, 2026 1:01 PM UTC
* Wide divergence of US inflation measures becoming increasingly material to policy debate and sets the unusual statistical backdrop to the next CPI release
* Reflects many of the divergent opinions over AI, ‘relative price adjustment’ vs generalised inflation, temporary vs persistent overshoot.
BOE: Split Does Not Mean September Hike
July 30, 2026 12:45 PM UTC
. · Overall, the July MPC minutes and monetary policy report/press conference suggest that the MPC is not convinced of a September hike and a worsening of energy price rises and/or 2nd round effects would be required to shift the voting to a 25bps hike. While the MPC has a hawkish
China: Debt Surge Problems
July 28, 2026 10:55 AM UTC
· China general government debt/GDP is on an unstable upward trend. China authorities are reluctant to ease underlying fiscal policy more than the already large primary budget deficit, but are also reluctant to consider broadening of income tax or property taxes that would help fiscal
UK inflation momentum, persistence and 2nd round: BoE in ‘wait and see’
August 25, 2026 8:36 AM UTC
* Constructing alternative measures of inflation from the perspective of momentum, persistence, and second round expectations is useful when considering the BoE’s reaction function
* The message is partly reassuring but not fully and gives a nuanced picture
* Recent signals give time to wait and see
DM Central Banks Watching Stablecoins
August 20, 2026 10:55 AM UTC
· Overall, DM central banks have a watching brief for stablecoins and the scale of growth in the next 5 years. This is largely a USD centric issue, with stablecoins dominated by USD issuance. Central banks are watchful on whether it impacts access to low cost deposit for banks; guardi
Taiwan: China Coastguard Quarantine Risks Grow
August 10, 2026 7:55 AM UTC
· Given China’s coastguard recent actions, we now raise the probability of a full quarantine of Taiwan shipping to 20% versus 10-15% in 2027/28 (Figure 2), with the probability of some further measures beyond radio requests now above 50% in 2027/28 and in our baseline. Quarantine meas
CHF/JPY and the carry question
July 30, 2026 1:39 PM UTC
· CHF/JPY has become interesting from several directions: extreme relative valuation, changing carry rankings, opposing official preferences over currency direction, and the beginnings of a possible technical rollover. When things align, they can encourage some migration in positioning
Preview: Due September 4 - U.S. August Employment (Non-Farm Payrolls) - Corrections from recent payroll weakness and unemployment declines
August 20, 2026 4:58 PM UTC
We expect August’s non-farm payroll to rise by 75k both overall and in the private sector, still moderate but the strongest in both series since April. We however expect unemployment to correct higher to 4.2% after falling to 4.1% in July from 4.2% in June and before that three straight months at
Canada July CPI - Like the economy, picking up from recent core weakness
August 17, 2026 12:57 PM UTC
July’s Canadian CPI with a rise to 3.0% yr/yr from 2.8% is slightly stronger than expected, with the Bank of Canada’s core rates on balance slightly firmer, if still close to target for CPI-Median and CPI-Trim. The data suggests underlying inflation is about where the BoC wants, and may reduce f
Is CAD poised for a short-squeeze?
August 10, 2026 5:03 PM UTC
There's a decent argument that, event-risk given, CAD may be poised for a short-squeeze
Positioning is extreme and against the grain of recent $ moves
Data has been surprising to the upside supporting a shift in momentum
Lead indicator trends support a recent move back toward recovery and outperforma
FX Weekly Strategy: Asia, Aug 17-21
August 14, 2026 3:14 PM UTC
Canada trade deadline a wildcard, but skew has been favouring a short CAD squeeze
FOMC Minutes may give more insight to Fed debate
US yield retreat chips at $ longs, although also supports summer low vol risk (for now...)
Various/CHF still trend up...