August 4, 2025 6:44 PM UTC

The Fed’s July Senior Loan Officer Opinion Survey of bank lending practices suggests uncertainty is restraining investment demand, with supply signals on balance fairly neutral but demand signals weaker.

ECB Preview (Jul 24, Part One): Labor Market Looking Softer than Council Thinking

July 15, 2025 8:45 AM UTC

The next ECB Council meeting decision on Jul 24 looms but where market (understandably) sees no further cut, at least at that juncture.  Indeed, the ECB may signal signs of economic resilience albeit noting that the added uncertainty emanating from the latest U.S. tariff threat warrants more circum

Eurozone Flash GDP Preview (Jul 30): A Pause that Does Not Refresh?

July 22, 2025 9:13 AM UTC

For an economy that has seen repeated upside surprises and above trend growth of 1.5% in the year to Q1, GDP data do not seem to have had much impact is shaping, let alone dominating, ECB policy thinking. We think this will continue to be the case even where the looming Q2 data may show a modest con

LDP Likely Lose Control of the Japan Upper House

July 21, 2025 2:00 AM UTC

Early exit pools suggest the ruling LDP coalition will likely lose majority

Trump’s and Fed Easing

July 18, 2025 9:34 AM UTC

•    Trump goal of substantially lower short-term rates could be achieved with a recession, but otherwise is unlikely even when Fed chair Powell is replaced.  The majority of voting FOMC members will make decisions based on economics not politics.  However, Trump fixation with lower rates an

Tariffs: Seeking a Trigger for the TACO Trade

July 14, 2025 4:28 PM UTC

It has been fairly clear for some time that 10% represented a likely floor for the eventual Trump tariff regime. However, expectations that Trump would not be willing to go dramatically above that are being tested. A rate in the mid-teens still looks the most likely outcome, as the economic damage t

Reciprocal Tariffs: Some Hikes, Deals and Delays

August 1, 2025 8:40 AM UTC

 Though high reciprocal tariffs with some countries catches the headline, five of the top 10 countries with large bilateral deficits have reached framework trade deals, two have delays and three have higher tariffs imposed.  With exemptions on some USMCA Canada/Mexico goods, plus phones/ semicondu

2yr Germany and ECB Expectations

July 21, 2025 10:07 AM UTC

·       Money markets are putting too much weight on ECB communications and we feel that a softening labour market/financial conditions and more tariffs from the U.S. will be enough to shift the ECB to deliver two final 25bps cuts in H2 2025.  Though the 2yr Germany to ECB depo rate spread w

UK Labor Market – No Lack of Slack

July 17, 2025 6:58 AM UTC

Even the BoE has acknowledged that the UK economy is developing slack in its labor market that we suggest is now not so much less tight but decidedly loose. Indeed, just days after BoE Governor Bailey suggested that signs of increasing labor market slack might prompt faster rate cuts, more such evid

Turkiye MPC Preview: CBRT will Likely Restart its Easing Cycle on July 24

July 15, 2025 12:09 PM UTC

Bottom Line: After Central Bank of Turkiye (CBRT) held its key policy rate stable at 46% on June 19, we believe CBRT will likely reduce the policy rate by 150-250 bps during the MPC meeting scheduled for July 24 considering the deceleration trend in inflation in June beat forecasts and reinforced ex

Trump Deals: Japan, Philippines and Indonesia

July 23, 2025 8:26 AM UTC

•    Other countries cannot be guaranteed to get a Japan style deal, both as Japan is the key geopolitical ally in the Asia pivot against China and as Trump is keen to agree deals by August 1.  India and Taiwan are trying to finalize deals, but the EU is more difficult.  China 90 day deadlin

Trump’s Tariffs and Markets

July 17, 2025 12:00 PM UTC

The assumption in financial markets is that some trade framework deals will be done by August 1; some countries will make enough progress to be given an extra 30 days and some countries could have higher tariffs implemented. This would be broadly consistent with the average 15% tariff that is widely

EU Blindsided by Latest Tariff Threat

July 14, 2025 6:56 AM UTC

Having announced over the weekend a 30% “reciprocal” tariff from August 1 on EU exports to the U.S., the EU seems to be a state of somewhat shock, wary that months of negotiations have failed, let alone succeeded in reducing the tariff threat from the original 20%.  In response, European Commis

FX Weekly Strategy: July 21st-25th

July 18, 2025 3:13 PM UTC

Little data of note with PMIs the main focus
EUR/USD can hold above recent lows if Eurozone PMI shows another modest gain
Long trend higher in EUR/JPY looks excessive and suggests downside risks
NOK has potential to extend Friday’s recovery versus EUR and SEK

China: GDP Resilient in Q2, But

July 15, 2025 7:30 AM UTC

•    We do see H2 weakness relative to H1, as exports to the U.S. will slow again and the effects of the government consumption trade in programs fades.  However, H1 has been higher than our forecasts and thus we are revising 2025 GDP growth to 4.8% v 4.4% previously.  We keep 2026 GDP growt

FX Daily Strategy: N America, July 29th

July 29, 2025 10:18 AM UTC

US/EU trade deal shouldn’t be seen as risk positive
JPY consequently has potential for recovery
GBP can also make some gains against the EUR

U.S.-EU Trade Agreement: More a Framework Than a full Deal

July 28, 2025 9:08 AM UTC

In what seems to have been a fully-fledged political capitulation to the U.S. the EU, it seems, is accepting an agreement that would see an almost-blanket reciprocal 15% tariff on its exports to the U.S.  But there still some imponderables, not least the range of sectoral concessions, whether EU me

DM Rates: QT adds to Budget Deficits Pressures

July 22, 2025 10:05 AM UTC

·        Heavy issuance due to the U.S. budget deficit, plus Fed rate cuts will help further yield curve steepening in H2 2025.  In EZ and UK, ECB and BOE QT is large and amplifies the amount of debt that the rest of the market has to absorb, which will also drives yield curve steepening al

German Data Preview (Jul 30): Services Inflation to Slow Further?

July 21, 2025 12:49 PM UTC

Germany’s disinflation process continues, with the lower-than-expected June preliminary numbers refreshing and reinforcing this pattern, with a 0.1 ppt drop to 2.0%, a 10-mth low (Figure 1)!  But we see no further drop in the July preliminary numbers largely due to adverse energy base effects - 

Trump Tougher Posture with Russia

August 4, 2025 8:31 AM UTC

      We suspect that Trump will not follow-through with an across the board secondary sanction on importers of Russia oil, as it would freeze U.S./China trade again and could boost U.S. gasoline prices – high inflation is one main reason for Trump’s softer approval rating.  Trump could agre