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November 21, 2024
Trump International: DM Countries
November 21, 2024 7:06 AM UTC
Much uncertainty still exists on policy but in 2025 the EU will likely be under pressure from targeted new tariffs by the Trump administration, while also being asked to spend more on defense spending. Purchasing extra LNG and military hardware from the U.S. is one way towards a potential trade de
October 31, 2024
October 24, 2024
October 02, 2024
Markets: Rate Cuts or Geopolitics?
October 2, 2024 9:36 AM UTC
Israel will likely counteract Iran, which will prompt a further missile attack by Iran. However, our bias remains that Israel main aim is to have a buffer zone in southern Lebanon up to the Latani river and not fight a prolonged war with Iran. This limits the economic fallout globally and on oil
September 27, 2024
September 25, 2024
Outlook Overview: Rate Cuts But How Far?
September 25, 2024 7:30 AM UTC
· The U.S. economy is slowing, with the critical question being whether this is a soft or harder landing. Our broad analysis leaves us inclined to the soft landing view into 2025, though we shall watch real sector data closely over the next 3-6 months to check the trajectory. Else
September 24, 2024
DM Rates Outlook: Rate Cuts Arrive Except Japan
September 24, 2024 9:00 AM UTC
• For U.S. Treasuries, we see 2yr yields coming down further on our baseline soft landing view, as the Fed moves consistently to a 3.00-3.25% Fed Funds rate. However, with considerable Fed easing already discounted, 2yr yield decline should be modest and 2yr yields should bottom mid-2025. 1
Equities Outlook: Choppy U.S. and Outperformance Elsewhere
September 24, 2024 8:30 AM UTC
• We now forecast 5450 for the S&P500 for end 2024, but could see a move to 5200/5000 in the next 3-6 months as volatile data keeps the soft v hard landing debate alive. On our baseline of a U.S. soft landing, we would see the S&P500 at 5600 by end 2025. The tech sector is still really i
Japan Outlook: A Hawkish Take
September 24, 2024 5:30 AM UTC
· GDP growth for 2024 has been revised lower to +0.2% after the consumption contraction in Q1 2024 and the subsequent sluggish recovery in Q2. Private consumption is expected to pick up along improving real wages but its magnitude will be limited by the unwillingness to consume at high
September 20, 2024
September 19, 2024
September 15, 2024
Sep 27 Outlook Webinar: Rate Cuts But How Far?
September 15, 2024 10:30 AM UTC
Uncertainty about whether the U.S. economy will have a soft or hard landing is growing as the market approaches Q4. This is shaping the debate regarding the scale of easing through the remainder of 2024 and 2025 by the Fed. European easing is underway, but how much further will central ba
August 27, 2024
August 13, 2024
Market Turbulence and What has Changed?
August 13, 2024 12:22 PM UTC
• We see the recent market turbulence as being partially a reduction in risky positions. However, the U.S. economy is slowing and triggering a debate about a soft or harder landing (we see slowing rather than recession in our baseline), while EZ data shows the recovery is not gaining moment
July 31, 2024
July 29, 2024
July 24, 2024
June 26, 2024
June 25, 2024
Outlook Overview: Cyclical and Structural Forces
June 25, 2024 10:15 AM UTC
• The global economy is showing signs of healing, as inflation comes back towards targets and growth recovers momentum in some economies. Nevertheless, the cyclical headwind of lagged monetary tightening remains in DM countries, and will likely be one of the forces slowing the U.S. economy
Equities Outlook: Choppy U.S. and Outperformance Elsewhere
June 25, 2024 7:05 AM UTC
• U.S. equities are overvalued and waiting for earnings growth to catch-up, which leaves the market choppy, directionless and vulnerable to intermittent 5% corrections. Our forecast slowing of the U.S. economy before Fed rate cuts or nervousness about the post-election prospects are potenti
June 24, 2024
DM Rates Outlook: Rate Cuts Arrive Except Japan
June 24, 2024 8:45 AM UTC
• For U.S. Treasuries we see a steady easing process from the Fed from September, which can allow 2yr yields to fall consistently. However, the decline in H2 2024 will be slower at the long-end from traditional yield curve steepening pressures and then we see fiscal stress in H1 2025 unde
June 21, 2024
Japan Outlook: Slow but not Steady
June 21, 2024 12:15 AM UTC
• GDP growth for 2024 has been revised lower to +0.4% as private consumption contracted stronger in Q1 2024 from moderating but still persistent inflationary pressure. We forecast consumption to gradually recover throughout the rest of 2024 as real wage turned from negative to positive yet
June 14, 2024
June 11, 2024
DM Fiscal Consolidation Problems: Politics/Central bank QT and Low Nominal GDP
June 11, 2024 2:10 PM UTC
Some governments are politically reluctant to restrain government expenditure growth or in the U.S. case raise taxes. This means that intermittent fiscal stress and concerns can be seen in the coming years. However, to get to crisis levels would require a government that abandons any attempts
May 28, 2024
May 27, 2024
BoJ's Door Closing But Window Opens
May 27, 2024 5:23 AM UTC
Since the BoJ moved interest rate to 0% in March, most market participants expects further tightening as it is hard to believe the BoJ would hike once after all these years of ultra-loose monetary policy, in face of higher inflation. However, with headline inflation trading closer to 2%, it seems th
May 16, 2024
France and Japan: Debt Fuelled Growth Problem
May 16, 2024 10:30 AM UTC
Most of the surge in debt/GDP in Japan and 40% in France is due to higher government debt and this should not be a binding constraint provided that large scale QT is avoided – we see the ECB slowing QT in 2025 and are skeptical about BOJ QT in the next few years. The adverse impact of higher deb
May 10, 2024
Asset Allocation 2024: Tricky Seven Months Remaining
May 10, 2024 1:06 PM UTC
Fed easing expectations for 2025 and 2026 can shift from a terminal 4% Fed Funds rate towards 3%, as the U.S. economy slows due to lagged tightening effects. Combined with Fed easing starting in September this should mean a consistent decline in 2yr yields. However, 10yr U.S. Treasury yields wil
May 02, 2024
China Politburo: Help for Housing, But No Game changers
May 2, 2024 10:50 AM UTC
Politburo statement in late April suggests extra support for residential property. However, we see this as being incremental rather than any game changers and we still see residential investment remaining a negative drag on 2024 GDP growth.
April 29, 2024
China: Depreciation Rather Than Devaluation
April 29, 2024 1:00 PM UTC
We feel that a devaluation of the Yuan is unlikely in 2024, both to avoid potentially politically destabilizing capital outflows but also to avoid upsetting the next U.S. president. Policy is geared more towards controlled depreciation to help competiveness but reduce other risks. The Yuan has a
April 26, 2024
Headwinds To Long-term Global Growth
April 26, 2024 9:30 AM UTC
Bottom line: While much focus is on the cyclical economic position to determine 2024 monetary policy prospects, the 2025-28 structural growth trajectory differs to the pre 2020 GDP trajectory for major economies. While global fragmentation has a role to play, aging populations are already having a
April 25, 2024
BoJ's Intervention and its impact
April 25, 2024 6:24 AM UTC
In the period of time when JPY significantly weakens or strengthens, BoJ will intervene in the FX market either through verbal or actual intervention. As JPY weakened significantly in the past months, once again we found ourselves in the proximity of FX intervention with unknowns for anonymity is ke
April 22, 2024
BoJ Preview: Showing no hurry
April 22, 2024 6:13 AM UTC
Our central forecast is for the BoJ to remain on hold for interest rate and signals the market they are in no rush to further tighten while allowing trend inflation data to lead policy direction in their forward guidance. BoJ has moved interest rate to 0% and officially removed YCC in March, citing
April 17, 2024
Markets: Fed Rather Than Middle East Worries
April 17, 2024 12:34 PM UTC
Global markets are being driven by a scale back in Fed easing expectations and we see a 5-10% U.S. equity market correction being underway. However, with the market now only discounting one 25bps Fed cut in 2024, any downside surprises on U.S. growth or better controlled monthly inflation numbers
April 03, 2024
April 02, 2024
Asset Allocation: Pausing for Breath
April 2, 2024 9:00 AM UTC
Into Q2, data and policy (actual and perceived) will dominate DM markets. The ECB will likely take the spotlight with a 25bps cut on June 7, as the Fed face a better growth/more fiscal policy expansion and a tighter labor market than the EZ but also with a better productivity backdrop and outlook to
March 27, 2024
Japan: 10yr JGB Yields To Exceed 1% in 2024?
March 27, 2024 10:00 AM UTC
Though BOJ soothed markets with last Tuesday’s rate hike and scrapping of yield curve control, we see scope for 10yr JGB yields to rise through 1% by summer/autumn. The current pace of net JGB purchases is a lot lower than H1 2023, while Ueda noted that this pace could be slowed in the future.
March 26, 2024
March 25, 2024
Equities Outlook: Cyclical Recovery Versus Structural Headwinds
March 25, 2024 9:00 AM UTC
· In the U.S., a tug of war between momentum and U.S. exceptionalism on the one side versus valuations and any deviations from the U.S. goldilocks scenario now means volatility and a risk of a correction. We feel that the U.S. equity market recovery can push onto 5250 for the S&P5
Japan Outlook: Beginning of A New Era?
March 25, 2024 4:54 AM UTC
Bottom Line:
Forecast changes: We revised 2024 GDP lower to +0.8% from +0.9% because private consumption is now expected to contract in Q1 2024. 2024 CPI is revised higher to +2.1% from +1.7% to address the stronger wage hike Japanese unions secured.
