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

December 19, 2024 9:25 AM UTC

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

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U.S. Outlook: Healthy Economy Facing Policy Risks
Paying Article

December 19, 2024 8:01 AM UTC

•    The U.S. economy, consumer spending in particular, has continued to show surprising resilience, and is growing at a pace probably in excess of long-run potential near 2.0%. Inflation has fallen significantly from its highs, with core PCE inflation now running slightly below 3.0%, but rema

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

December 17, 2024 11:00 AM UTC

  We do see a package of stimulative fiscal policy measures for 2025 including Yuan1-3trn infrastructure spending; Yuan1trn funds to buy completed homes for affordable housing and Yuan1trn capital injection to the big six state banks. Some modest measures for low-income households and to boost soci

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Equities Outlook: U.S. Exceptionalism v Valuations
Paying Article

December 18, 2024 10:05 AM UTC

·        The glory days of exceptionalism for U.S. equities will likely extend in Q1 2025 to bring the S&P500 to 6200-6300. The problem is that valuations have now become stretched with S&P500 ex magnificent 7 on a forward P/E of 19 and valuations out of line with real bond yields (Figure 1)

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Eurozone Outlook: Trump, Tariffs and the Possible Trade Tremor
Freemium Article

December 17, 2024 8:16 AM UTC

 ·       Once again, it does seem as if EZ activity expectations are being pared back in line with our below consensus thinking, most notably for next year. The result is that while the economy has been growing afresh it is doing so timidly, with downside risks persisting more clearly into 2

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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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DM Rates Outlook: Policy and Spread Divergence
Paying Article

December 19, 2024 12:07 PM UTC

•    2yr U.S. Treasury yields can decline initially as the Fed finishes easing (Figure 1), but as the sense grows that the rate cut cycle is stopping, we see the 2yr swinging to a small premium versus the Fed Funds rate – as the market debates the risks of a future tightening cycle.  For 10y

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Commodities Outlook: Strategic Caution
Paying Article

December 18, 2024 11:00 AM UTC

The oil supply outlook depends on OPEC+ policies, with the reversal of the voluntary 2.2 million b/d cuts being officially delayed until April 2025. However, we expect the progressive rollover of these barrels into the market to be further postponed at least until the third quarter of 2025, as the c

Psychology for major markets December 20th
Paying Article

December 20, 2024 11:12 AM UTC

USD remains firm, particularly against the JPY, GBP falling back

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UK GDP Review: Friday the 13th Weakness Confirmed?
Freemium Article

December 13, 2024 7:41 AM UTC

The latest 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, this

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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. 

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Preview: Due January 10 - U.S. December Employment (Non-Farm Payrolls) - Closer to solid underlying trend
Paying Article

December 18, 2024 3:02 PM UTC

We expect 175k increase in December’s non-farm payroll, with 140k in the private sector, a number that should be closer to underlying trend than a strong November and a weak October. We expect unemployment to be unchanged at 4.2% and average hourly earnings to slow to a 0.3% increase after two str

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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

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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FOMC eases by 25bps, dots and economic forecasts more hawkish
Freemium Article

December 18, 2024 7:21 PM UTC

The FOMC has eased by 25bps as expected but the dots look hawkish with only 50bps of easing seen in 2025 rather than 100bps, and there was one dissenting vote, Cleveland Fed President Hammack preferring to keep rates unchanged. Core PCE price forecasts have also been revised significantly higher, 20

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U.S. November Core PCE Prices significantly softer than Core CPI
Paying Article

December 20, 2024 1:59 PM UTC

November PCE prices at 0.1% overall and core has sharply underperformed gains of 0.3% in both overall and core CPI, easing some of the inflationary concerns generated by two straight gains of 0.3% in September and October core PCE prices. Gains of 0.3% in personal income and 0.4% in spending are als

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

December 20, 2024 12:15 PM UTC

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

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Asia/Pacific (ex-China/Japan) Outlook: Trump Tariffs, China +1 and Growth
Paying Article

December 19, 2024 10:57 AM UTC

Emerging Asian economies are projected to lead global growth in 2025, with India and Southeast Asia at the forefront. These regions will anchor resilience in Asia, even as China's economic growth remains moderate.  
Inflation trajectories will vary across Asia, with India experiencing sticky prices

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EMEA Outlook: Rate Cuts in 2025 Despite Global Uncertainties
Paying Article

December 17, 2024 8:00 AM UTC

·     In South Africa, our end-year policy rate prediction remains at 7.0% for 2025 and 6.5% for 2026.  We foresee headline inflation will fall to 4.2% and 4.6% in 2025 and 2026, respectively, considering power cuts (loadshedding) are relieved and the domestic fiscal outlook is moderately stab

Preview: Due January 3 - U.S. December ISM Manufacturing - Sustaining November improvement
Paying Article

December 16, 2024 3:36 PM UTC

Despite a correction lower in the S and P manufacturing PMI, we expect December’s ISM manufacturing index to sustain a November improvement, edging up to 48.5 from 48.4. 

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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

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Fed: Policy Easing Slowing
Paying Article

December 18, 2024 8:35 PM UTC

The FOMC statement, FOMC medians and Powell during the Q/A left the impression that Fed easing will slow down into H1 2025. We now see two 25bps cuts in March and June 2025 driven by a Fed’s desire to avoid too much labor market slack occurring, but then pausing for the remainder of 2025 at a 3.75

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Chartbook: Quarterly Forecasts FX/Rates/Equities For Q1 2025
Paying Article

December 18, 2024 9:44 AM UTC

Our latest quarterly Forecasts FX/Rates/Equities/Commodities for Q1 2025 are now available, see resources at the end.  

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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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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DM FX Outlook: USD to edge lower despite high yields
Paying Article

December 20, 2024 8:28 AM UTC

·       Bottom Line: Recent strong US data has bolstered the USD, with the Trump election victory also supportive due to expectations of tax cuts and tariffs which are seen leading to less Fed easing than previously expected. While we still see the USD weakening through 2025 as Fed easing red

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Japan Outlook: Lukewarm Japan and BoJ
Paying Article

December 20, 2024 12:00 AM UTC

·        Due to the slow recovery in consumption, 2024 GDP has been revised lower to -0.5%. Private consumption will continue to grow throughout 2025/26 gradually as business price/wage setting behavior gently shift and Japanese consumers adapting to higher inflation. Wage growth in 2025 wil

FX Daily Strategy: N America, December 18th
Paying Article

December 18, 2024 9:47 AM UTC

FOMC the focus, although a 25bp cut is nearly fully priced in
The dot plot looks likely to suggest more rate cuts than are currently priced in…
…so there are some USD downside risks
GBP slightly weaker after CPI

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UK CPI Review (Dec 18-19): Still Mixed Inflation Signals
Freemium Article

December 18, 2024 7:51 AM UTC

While exceeding both our and BoE thinking, November CPI inflation jumped 0.3 ppt to 2.6%, actually an eight month high.  Services inflation remain ned at 5.0% while the core rose 0.2 ppt to 3.5%, also exceeding Bank projections (Figure 1).  The data comes after more cost pressure worries were fann

Preview: Due January 7 - U.S. December ISM Services - Rebounding from a weaker November
Paying Article

December 16, 2024 4:04 PM UTC

While the index is unlikely to be quite a strong as the 58.1 S and P services PMI for December, we expect a significant bounce in December’s ISM services index, to 55.5 from November’s weaker 52.1. 

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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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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

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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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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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?

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

Continuum Economics Calendar January 2025
Paying Article

December 20, 2024 2:33 PM UTC

Data and Events Calendar January 2025.

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EMFX Outlook: Hit From Tariffs, Before Divergence
Paying Article

December 20, 2024 10:00 AM UTC

·        EM currencies on a spot basis will remain on the defensive in H1 2025, as we see the U.S. threatening and then introducing tariffs on China imports – 30% against the current average of 20%. China’s response will likely include a Yuan (CNY) depreciation to the 7.65 area on USD/CN

FX Weekly Strategy: Asia, December 16-20th
Paying Article

December 13, 2024 4:00 PM UTC

A Cautious 25bps Easing for FOMC
BoJ To hike or Not to Hike
Riksbank Flagging a Little Further Easing?
Norges Bank Still Resistant
Benign Inflation Signals But BoE Still Cautious

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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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 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. 

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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

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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

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