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Markets 2025: A Tale of Two Halves
Paying Article

January 6, 2025 8:10 AM UTC

·  For financial markets, 2025 will likely be a game of two halves.  US exceptionalism will likely drive US equities to extend outperformance in H1, while the USD rises further as tariffs (threats and actual) escalate.  However, 10yr U.S. Treasury yields will likely push higher in H2, which can

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U.S. Yields Drag Germany and France Higher
Paying Article

January 14, 2025 8:15 AM UTC

The EUR real exchange rate is well above the 2014 low, while ECB officials are guiding that more rate cuts are coming.  2yr German yields are unlikely to rise much further and will likely come back down in Q2 (here).  A January 30 ECB cut will likely build more easing expectations, though more of

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U.S. Treasuries versus Bunds and Gilts
Freemium Article

January 10, 2025 8:10 AM UTC

·        UK Gilts have been dragged higher by rising Treasuries and market concerns that BOE rate cuts will be limited (here), while 10yr Bund yields have also been dragged higher by Treasuries concerns on Fed rate cuts/budget deficit and tariffs.  Multi quarter we see this as overdone. We

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Cyberattacks and AI Misinformation: Market and Economic Fallout
Paying Article

January 13, 2025 8:10 AM UTC

   A major cyberattack is a tail risk, while a huge AI misinformation crisis is a modest crisis in our view.  Russia/China and Iran are less likely to launch a state sponsored cyberattack for geopolitical reasons and also uncertainty over president elect Donald Trump’s response.  A huge AI mis

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Gilt Yields Rise on U.S. and Fiscal Slippage Concerns
Paying Article

January 9, 2025 9:40 AM UTC

·       10yr Gilts yields are rising on concerns of UK fiscal slippage, but also higher U.S. yields and funding pressures as GBP100bln of BOE QT adds to the budget deficit targeted at 4.5% of GDP in 2024/25.  Chancellor Reeves will likely recommit to the fiscal rules (ie further small correc

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December Outlook: The Trump Effect- Tariffs, Fiscal Shifts and Geopolitics
Paying Article

December 30, 2024 8:05 AM UTC

All chapters of the December Outlook are now available and simply click the link below. 

USD/JPY flows: Trump and the JPY
Paying Article

December 24, 2024 10:05 AM UTC

Hedge funds are gearing up for 160 or 165 on USD/JPY in Q1 2025, with the BOJ delaying tightening and the USD mood positive.

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U.S. Yields and an Equity Market Correction
Paying Article

January 15, 2025 8:15 AM UTC

Treasury yields look to have reached a level that the divergence in valuations means that equities are on the defensive. Unless U.S. Treasury yields come down then the S&P500 looks to be heading to 5400-5600 near-term.  This is most likely a correction given that the Fed is likely to still leave th

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Brazil CPI Review: Some Deterioration in December
Freemium Article

January 13, 2025 2:28 PM UTC

Brazil’s CPI grew by 0.52% in December, ending 2024 at 4.8%, above the Central Bank’s target range (1.5%–4.5%). Key drivers included food (+1.2% m/m) and household spending (+0.7%). Core inflation rose for the fourth consecutive month, reaching 4.3% Y/Y. Elevated inflation is expected in early

North American Summary and Highlights 10 January
Freemium Article

January 10, 2025 8:52 PM UTC

Overview - The USD bounced on a stronger than expected non-farm payroll, though with equities struggling on a rise in Michigan CSI inflation expectations, gains in USD/JPY failed to hold. 

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BoJ: New Year, Old Trick?
Freemium Article

January 7, 2025 12:00 AM UTC

USD/JPY is once again close to historical high. But are we seeing an imminent intervention?

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Waiting for China Fiscal Stimulus
Freemium Article

January 3, 2025 9:31 AM UTC

It is not clear why China’s authorities are slow in announcing fiscal policy measures, but it could be either acceptance of 5% GDP trajectory or just below or alternatively a desire to see the timing and scale of extra U.S. trade tariffs on China from the incoming Trump adminstration.  We see a t

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U.S. 10yr Yields Fiscal Worries
Paying Article

December 31, 2024 8:15 AM UTC

•    As 2025 progresses the budget bill is likely to cement prospects of an 8-9% budget deficit in the U.S. for years to come.  This will likely hurt Treasuries most just before the budget deficit expands quarterly Treasury issuance in Q4 2025/Q1 2026.  Worse we have a non-consensus call of

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First Cut Since 2023: CBRT Lowered Key Rate to 47.5%
Paying Article

December 26, 2024 3:14 PM UTC

Bottom Line: Central Bank of Turkiye (CBRT) lowered its key policy rate by 250 bps to 47.5% on December 26 which was the first rate cut in around two years, but said it would remain cautious about future cuts. In its press release, CBRT cited a flat underlying trend of inflation in November and sugg

North American Summary and Highlights 17 January
Freemium Article

January 17, 2025 8:44 PM UTC

Overview - GBP slipped on weak retail sales while strong housing starts and industrial production lifted the USD. 

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UK CPI Review: Clearly More Reassuring Inflation Signals
Paying Article

January 15, 2025 7:47 AM UTC

Amid current bond market ructions, which some are suggesting reflects stagflation worries, we think that looming December UK CPI data may help dispel some of the inflation aspect of those concerns.  Indeed, with markets are looking for the headline rate to stay at November’s 2.6% outcome, the act

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UK CPI Preview (Jan 15): More Mixed Inflation Signals
Paying Article

January 10, 2025 11:55 AM UTC

Amid current bond market ructions, which some are suggesting reflects stagflation worries, we think that looming December UK CPI data may help dispel some of the inflation aspect of those concerns.  Admittedly, markets are looking for the headline rate to nudge up a notch, although we look for a st

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2025 will be Key for CBRT
Freemium Article

January 8, 2025 3:06 PM UTC

Bottom Line: After Central Bank of Turkiye (CBRT) lowered its key policy rate by 250 bps to 47.5% on December 26, which was the first rate cut in around two years, we believe the rate cuts will continue in 2025 following inflation fighting drive in 2024 while our end year key rate prediction remains

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Trump Policies Awaited
Paying Article

January 8, 2025 8:30 AM UTC

We see a transactional approach on trade, with tariff threats translating into actual tariffs on China initially and Trump rather than Congress having control on tariffs.   On the budget, we see scope for more tax cuts than expanding the lapsing parts of the 2017 tax cuts and expenditure cuts bein

Psychology for major markets January 15th
Paying Article

January 15, 2025 11:03 AM UTC

USD correcting lower, JPY benefiting from more hawkish BoJ tone

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U.S. December Employment - Case for a January FOMC pause looks stronger still
Paying Article

January 10, 2025 2:00 PM UTC

December’s non-farm payroll with a 256k increase, 223k in the private sector, is significantly higher than expected and suggests the economy has significant momentum entering 2025, adding to an already strong case for a Fed pause in January. The unemployment rate slipped to 4.1% from 4.2% but a 0.

North American Summary and Highlights 8 January
Freemium Article

January 8, 2025 8:30 PM UTC

Overview - The USD was generally strong supported by Trump comments but the GBP was particularly weak. 

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Yuan Decline: Waiting to Offset Trump Tariffs?
Paying Article

January 7, 2025 8:35 AM UTC

China’s authorities are reluctant to see too quick a decline in the Yuan, as it could accelerate capital outflows and cause political unrest for the communist party.  Thus the preference remains for controlled declines in the Yuan with declines followed by periods of forced stabilization.  We do

Psychology for major markets January 6th
Paying Article

January 6, 2025 11:01 AM UTC

EUR rallying helped by solid equity markets

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Inflation Falls More Than Expectations in December: 44.4% YoY
Paying Article

January 3, 2025 11:34 AM UTC

Bottom line: Inflation fell more than expected to 44.4% annually in November supported by benign food prices and relative TRY stability. We envisage that inflation will continue to decelerate in Q1 2025 by moderate slowdown in domestic demand and credit growth, and will likely be helped by lower-t

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December Outlook Webinar on Jan 7: The Trump Effect- Tariffs, Fiscal Shifts and Geopolitics
Paying Article

December 24, 2024 8:30 AM UTC

    The U.S. economy’s momentum remains reasonable before the impact of President-elect Trump’s policies in 2025 and 2026.  While high uncertainty exists on the scale and timing of policy, the strategic bias is clear – sizeable tax cuts that will boost the budget deficit; tariffs (threats

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Mexico’s Plan: An Eye on Nearshoring and Displacing China in U.S.
Freemium Article

January 15, 2025 1:17 PM UTC

President Claudia Sheinbaum’s “Mexico Plan” targets USD 270 billion in investments, aiming to reduce poverty, boost sustainability, and expand Mexico’s economy. Key goals include nearshoring, increasing domestic production, and fostering U.S. trade relations. However, private investment stag

FX Daily Strategy: N America, January 15th
Paying Article

January 15, 2025 10:08 AM UTC

US and UK CPI the main focus
USD biased lower given the strong post-election performance and minimal Fed easing now priced in
GBP also has downside risks as inflation data support a more dovish BoE view

FX Daily Strategy: Asia January 14th
Paying Article

January 13, 2025 10:00 PM UTC

US PPI unlikely to have much impact
USD risks now look to be mainly on the downside with good news largely priced in
Yield spreads and valuation suggest parity in EUR/USD unlikely to be threatened
AUD looks particularly underappreciated

Chart GBP/USD Update: Prices remain under pressure, but studies oversold
Freemium Article

January 13, 2025 8:32 AM UTC

The anticipated minor test above 1.2300 has been pushed back from beneath the 1.2352 weekly low of 2 January

Chart GBP/USD Update: Extending losses
Paying Article

January 13, 2025 2:12 AM UTC

Prices remains under pressure and break to fresh low see prices weighing on the 1.2200/1.2187 support

FX Weekly Strategy: January 13th-17th
Paying Article

January 10, 2025 4:51 PM UTC

Hard for USD/JPY to extend higher from current levels
US equities and yields struggling to rise further in concert
EUR/USD downside also limited as yield spreads move in EUR’s favour
GBP has more potential downside with expectations of BoE cuts too conservative

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UK GDP Preview (Jan 16): Continued Weakness?
Paying Article

January 10, 2025 3:20 PM UTC

The last set of GDP data add to questions about the UK’s economy’s apparent solidity, if not strength, as seen in sizeable q/q gains in the first two quarters of the year of 0.7% and 0.5% respectively.  As we envisaged, October saw a second successive m/m drop of 0.1%, well below expectations,

North American Summary and Highlights 9 January
Freemium Article

January 9, 2025 8:56 PM UTC

Overview - In a subdued FX market focus was on the GBP, which came under pressure early before a partial recovery. 

FX Daily Strategy: APAC, January 3rd
Paying Article

January 2, 2025 3:41 PM UTC

Limited data and events to move the market
JPY weakness is extreme – risks on the JPY upside
USD strength hard to oppose, but Trump effect could be negative
GBP strength hard to square with economic weakness

FX Weekly Strategy: December 23rd - January 3rd
Paying Article

January 2, 2025 10:05 AM UTC

Limited data and events to move the market
JPY weakness is extreme – risks on the JPY upside
USD strength hard to oppose, but Trump effect could be negative
GBP strength hard to square with economic weakness

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ECB December Council Meeting Account Review: The ‘Last Mile’ Appears to Have Shortened Somewhat?
Freemium Article

January 16, 2025 1:27 PM UTC

As the account of the December 11-12 Council meeting noted, a fourth 25 bp discount rate cut was agreed but there appeared to be a minority wanting a 50 bp move. But this account also shows some confusion as to just what the advertised change in forward guidance (in which the ECB accepts that on-tar

Asia Summary and Highlights 16 January
Freemium Article

January 16, 2025 4:38 AM UTC

Asia Session
The Australian labor market stayed strong and see another 55.3k employment gains, with both the unemployment and participation rate ticked up by 0.1%. While most gains are in part time job, a rotation from the November report, it does not take out the strength of such report. However, th

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FOMC Preview for January 29: A Cautious Hold
Paying Article

January 15, 2025 8:10 PM UTC

The FOMC looks set to keep rates on hold at 4.25-4.5% at its January 29 meeting. The statement is unlikely to give much away but the message is likely to be one of cautious optimism on inflation, suggesting further easing is likely but dependent on incoming data. Policy uncertainty under the incomin

Chart GBP/USD Update: Choppy in range - resistance at 1.2300
Freemium Article

January 15, 2025 8:30 AM UTC

Little change, as flat overbought intraday studies keep near-term sentiment cautious

FX Daily Strategy: N America, January 14th
Paying Article

January 14, 2025 10:10 AM UTC

US PPI unlikely to have much impact
USD risks now look to be mainly on the downside with good news largely priced in
Yield spreads and valuation suggest parity in EUR/USD unlikely to be threatened
AUD looks particularly underappreciated

North American Summary and Highlights 13 January
Freemium Article

January 13, 2025 8:11 PM UTC

Overview - The USD was slightly firmer, EUR/USD seeing a dip in Europe and USD/JPY picking up in North America. 

Preview: Due January 21 - Canada December CPI - To fall on GST tax holiday
Paying Article

January 13, 2025 1:54 PM UTC

We expect Canadian CPI to slip to 1.7% yr/yr from 1.9%, the fall largely due to a temporary supse4cuion of the Goods and Services Tax that will run from Mid-December through Mid-February. Bank of Canada Governor Tiff Macklem has stated that the tax suspension is expected to move inflation down to a

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Unemployment Rate Hits 8.6% in November in Turkiye
Paying Article

January 10, 2025 4:38 PM UTC

Bottom line: According to Turkish Statistical Institute’s (TUIK) figures announced on January 10, the unemployment rate declined to 8.6% in November from 8.7% in October. The number of jobless dropped 84,000 from October to 3.07 million in November, the data showed. As unemployment rate continue

FX Daily Strategy: N America, January 10th
Paying Article

January 10, 2025 9:57 AM UTC

US employment report to dominate
Strong numbers may be needed to sustain USD strength
CAD had some upside scope after recent losses
NOK/SEK remains undervalued

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SARB to Continue Rate Cuts in 2025, but the Pace Will Depend on Inflation Trajectory and Global Developments
Paying Article

January 9, 2025 11:23 AM UTC

Bottom line: After South African Reserve Bank (SARB) started cutting the key rate on September 19 and decreased the rate from 8.25% to 7.75% in 2024 given fall in inflation below midpoint of target band of 3% - 6%, suspended power cuts (loadshedding) and deceleration in inflation expectation, we for

North American Summary and Highlights 7 January
Freemium Article

January 7, 2025 8:33 PM UTC

Overview - The USD bounced on a rise on US job openings. 

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Mexico CPI Preview: Christmas Acceleration
Freemium Article

January 6, 2025 2:19 PM UTC

Mexico's December CPI is forecasted to grow by 0.5% in December, bringing 2024 inflation to 4.3%, above Banxico's target. Core CPI aligns better at 3.5%. Weak demand aids inflation convergence, expected by Q3 2026. Risks include a 22% MXN depreciation and U.S. tariffs. Banxico is likely to continue

Europe Summary and Highlights 6 January
Paying Article

January 6, 2025 11:04 AM UTC

The USD lost ground against the riskier currencies but gained against the JPY through the European morning. 

FX Weekly Strategy: January 6th-10th
Paying Article

January 3, 2025 4:33 PM UTC

USD remains firm going into US employment report
US data unlikely to provide a reason for a weaker USD…
…but recent USD strength starting to look overdone
Japanese cash earnings data may impact the JPY