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U.S. Strategic Fiscal Comparisons
August 18, 2025 9:05 AM UTC
The U.S. short average term to maturity is a structural fiscal weakness if higher rates lift U.S. government interest costs close to the nominal GDP trend. Hence, Trump’s pressure for fiscal dominance of the Fed to deliver lower policy rates and reduce U.S. government interest rate costs. Howeve
ECB Council Meeting Review: Complacency Rules the Day!
September 11, 2025 2:08 PM UTC
A second successive stable policy decision was the almost inevitable outcome of this month’s ECB Council meeting resulting in the first consecutive pause in the current easing cycle, with the discount rate left at 2.0%. Also as expected, the ECB offered little in terms of policy guidance; after
ECB Council Meeting Preview (Sep 11): No Change and Little Guidance
September 3, 2025 9:20 AM UTC
A second successive stable policy decision is very likely at next week’s ECB Council meeting resulting in the first consecutive pause in the current easing cycle, with the discount rate left at 2.0%. We see the ECB offering little in terms of policy guidance; after all, in July the Council sugge
DM Rates: Steeper Yield Curves: More to Come?
September 10, 2025 10:55 AM UTC
Steeper yield curves are a function of monetary easing cycles, budget deficits, lower central bank holdings of government bonds, a move towards pre GFC real rates and shifting demand from pensions funds and life insurance companies. Scope exists for further steepening in the U.S., EZ and UK with m
Canada August Employment - With Q3 looking weak, we now expect the BoC to ease in September
September 5, 2025 1:41 PM UTC
Canada’s August employment report with a 65.5k decline with unemployment up to 7.1% from 6.9% is much weaker than expected. While the detail is a little less weak than the headlines suggest, and the data has been volatile recently, we are revising our Bank of Canada call, and now expect a 25bps ea
France and Italy: Deficit, ECB QT and Foreign Debt Holders Stories
August 26, 2025 7:35 AM UTC
A large budget deficit in France, looking persistent given the current political impasse, combined with ECB QT means that the market has to absorb a very large 8.5% of GDP of extra bonds. Our central scenario is that persistent French supply causes a further rise in 5yr plus French government yields
Fed Powell: Signals September Cut
August 22, 2025 2:35 PM UTC
Fed Chair Powell spent the first 10 minutes at Jackson hole reviewing current data and discussing the policy stance. Powell clearly signaled a September cut, given downside risks to employment after the July employment report revisions. However, Powell did not signal whether the move will be 25b
US 10yr: Fed Independence V Economy and Budget
August 26, 2025 12:14 PM UTC
10yr yields face upward pressure from Fed independence questions, but downward pressure from a slowing economy and a better supply picture with CBO estimates of USD4trn of tariff revenue over 10 years. One way to continue playing these themes is for yield curve steepening, where we see scope for the
France: Kicking the Fiscal Can (Again)
September 9, 2025 8:41 AM UTC
That France has seen the departure of yet another prime minister is no surprise, hence why financial markets took the confidence vote in its stride. Admittedly, French sovereign spreads and yields have risen in the last month, but even so the actual level of bond yields remains well below that of
Aging: Slow Growth for Some in 2020’s
September 1, 2025 8:35 AM UTC
Population aging always seems to be beyond the market horizon, but the 2020’s are already seeing population aging in some countries. What is the economic impact? Aging is already causing a peak in labor force in China and the EU. Meanwhile, the population pyramid also means less consumptio
BoE Preview (Sep 18): Guilty on Gilts?
September 9, 2025 3:54 PM UTC
That the BoE will keep Bank Rate at 4% after this month’s MPC meeting is all but certain. Indeed, the MPC majority has hinted that the recent regular quarterly pace of easing seen so far in the cycle may be slowed or paused amid price persistence concerns. This reflects the MPC majority’s co
Eurozone: ECB Feels it Has More Reason to ‘Wait and See’?
August 21, 2025 10:02 AM UTC
To suggest that recent EZ real economy indicators, such as today’s August PMI flashes, have been positive would be an exaggeration. But, at the same time, the data (while mixed and showing conflicts - Figure 1) have not been poor enough to alter a probable current ECB Council mindset that the ec
Expecting a Negative Non-Farm Payroll Benchmark Revision
September 8, 2025 3:25 PM UTC
Tuesday sees the release of the preliminary Labor Dep’t estimate for the March 2025 non-farm payroll benchmark, with expectations for a significant negative, possibly as large as the -818k preliminary estimate for the March 2024 benchmark delivered a year ago. The eventual revision to March 2024 p
EZ HICP Review: Headline Inflation Edges Higher as Services Fall to Fresh Cycle-low
September 2, 2025 9:34 AM UTC
As we repeated again, HICP inflation – even now a notch above target – is very much a side issue for the ECB at present, offset instead by moderate concerns whether the apparent resilience of the real economy may yet falter. This mindset will not have been altered by the flash HICP data for Au
Jackson Hole: Fed/ECB/BOJ and BOE on Labor Markets
August 25, 2025 9:02 AM UTC
Fed Powell focused on the cyclical softening of employment to back a more dovish undertone. In contrast other central bank heads focused on structural labor market issues. While ECB Lagarde was pleased with the post COVID EZ picture, current economic softness still leaves us forecasting two furt
UK Labor Market: Is the BoE too Complacent?
August 19, 2025 10:10 AM UTC
Unlike the Fed, which has dual mandate of curbing inflation and promoting employment, the BoE remit is purely the former. But it is clear that labour market considerations weigh heavily on the dovish contingent of the MPC and possibly increasingly so. However, we feel that the BOE is not fully e
Trump-Putin Summit: No Ceasefire Agreement, Possible Concessions Discussed
August 18, 2025 12:29 PM UTC
Bottom Line: U.S. President Trump and Russian President Putin met in Alaska on August 15 to discuss the fate of war in Ukraine. The meeting lasted three hours, but did not yield an immediate ceasefire agreement as we expected. After the meeting, Trump and Putin both signaled what could happen next i