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July 3, 2025 1:09 PM UTC
June’s non-farm payroll is surprisingly strong overall with a rise of 147k, with 16k in net upward revisions, but private payrolls at 75k are weaker than expected, with 16k in net negative revisions. Unemployment unexpectedly fell to 4.1% from 4.2%, but average hourly earnings are weaker than expe
July 3, 2025 9:30 AM UTC
The U.S. equity market has returned to be clearly overvalued on equity and equity-bond valuations measures and is vulnerable to a new correction in H2 on any moderate bad news (e.g. further economic slowing and corporate earnings downgrades). In contrast, U.S. Treasuries are at broadly fai
July 2, 2025 3:20 PM UTC
We expect a 0.1% increase in June retail sales to follow two straight declines, with a 0.3% incase ex autos that will reverse a 0.3% May decline. Ex autos and gasoline, we also expect a 0.3% increase, after a 0.1% May decline that followed a 0.1% April increase.
July 2, 2025 1:01 PM UTC
We expect a 75k increase in June’s non-farm payroll, significantly slower than May’s 139k though consistent with a slowdown in growth rather than an economy entering recession. We expect an in line with trend 0.3% increase in average hourly earnings and an uptick in unemployment to 4.3% after th
July 2, 2025 8:30 AM UTC
We are concerned that DM central banks are underestimating the lagged impact of 2021-23 tightening and ongoing QT, which impacts the transmission mechanism of monetary policy. Central banks need to consider cyclical and structural issues, but also need a more rounded view of the stance and implica
July 1, 2025 6:42 PM UTC
We expect June CPI to increase by 0.3% overall and by 0.3% ex food and energy, with the overall pace close to 0.3% before rounding but the core rate rounded up from 0.27%. This would still be the strongest core rate since January and reflect tariffs starting to feed through, something expected by Fe
July 1, 2025 5:35 PM UTC
The Senate has passed its version of the “One Big Beautiful Bill” relying on the casting vote of Vice-President Vance. The Senate’s version adds more to the deficit than the version previously passed by the House, also passed by only one vote, meaning that a rapid approval of the Senate versio
July 1, 2025 12:55 PM UTC
Our central scenario (but less than 50%) is towards a scenario of compromise, with some agreements in principle or trade framework deals, delays for most other negotiating in good faith but with one or two countries seeing a reciprocal tariff rise e.g. Spain and/or Vietnam. This could still be fol
June 30, 2025 7:30 AM UTC
· Japan, S Korea and Australia could eventually agree to some extra commitment to increase (self) defence spending in the next 5-10 years though perhaps not targets like NATO countries. This could come as part of the trade deal negotiations currently underway. Japan and S Korea
June 27, 2025 6:05 PM UTC
The release of advance May trade and inventory data, plus May consumer spending, provides us with clearer signals on Q2 GDP, even if we have not yet seen any data for June. We currently expect a modest annualized gain of 1.4%, following a 0.5% decline in Q1, leaving a subdued first half of the year.
June 27, 2025 12:59 PM UTC
May’s core PCE price index, while not alarming, is at 0.2% a little firmer than expected, with yr/yr growth rising to 2.7% from an upwardly revised 2.6% (from 2.5%) in April. Personal income and spending data is weak, down by 0.4% and 0.,1% respectively.
June 26, 2025 2:25 PM UTC
We expect a 0.1% rise in May’s core PCE price index, matching to core CPI, continuing to show limited tariff pass-through. Subdued data are also likely from personal income, which we expect to be unchanged, and personal spending, where we expect a 0.1% decline. Downward revisions to Q1 income and
June 25, 2025 8:05 AM UTC
· The Chinese Yuan (CNY) will likely remain stable while trade negotiations with the U.S. continue. We see a trade deal in our baseline (probably Q4) and then a small rise in CNY v USD due to general USD weakness.
· In terms of total returns for the remainder of 2025, th
June 25, 2025 7:20 AM UTC
· President Donald Trump still wants to use the tariff tool, and we see the eventual average tariff rate being in the 13-15% area, lowered by deals but increased by more product tariffs. Any lasting legal block on reciprocal tariffs will likely see the administration pivoting towards ot
June 24, 2025 6:06 PM UTC
While two Fed Governors. Waller and Bowman, have suggested a July easing could be appropriate, testimony from Chairman Powell suggests a move that early is unlikely, though September is possible if inflation data continues to show a lack of feed through from tariffs. We, and Powell, expect some acce
June 24, 2025 8:15 AM UTC
Though the U.S. equity market has rebounded, we still scope for a fresh dip H2 2025 to 5500 on the S&P500 as hard data softens further to feed into weaker corporate earnings forecasts and CPI picks up and delays Fed easing. However, the AI story is still a positive, while share buybacks
June 24, 2025 7:05 AM UTC
· Bottom Line: After making initial gains after the election, the USD has followed a similar path to the first Trump presidency, falling back steadily this year as optimism on the economy has faded, with the introduction of tariffs contributing to more negative sentiment. Much as in the
June 23, 2025 3:17 PM UTC
A measured or modest Iran retaliation could be used by the U.S. to seek a path back towards negotiation. Israel would likely want to continue to degrade Iran nuclear and military facilities, but the U.S. could eventually pressure Israel to stop. This is our baseline, though the military attac
June 23, 2025 8:30 AM UTC
• We see the U.S. yield curve steepening in the next 6-18 months. 2yr U.S. Treasury yields can step down with cautious Fed easing on a modest/moderate growth slowdown and also if the Fed keeps an easing bias in H2 2026. 10yr U.S. Treasury yields face a tug of war between lower short-dated y
June 20, 2025 4:29 PM UTC
We expect a 75k increase in June’s non-farm payroll, significantly slower than May’s 139k though consistent with a slowdown in growth rather than an economy entering recession. We expect an in line with trend 0.3% increase in average hourly earnings and an uptick in unemployment to 4.3% after th
June 20, 2025 2:14 PM UTC
• Policy uncertainty remains high and final details of the tariffs will depend on the decisions of the courts as well as those of President Trump. However the magnitude of the tariffs is becoming easier to predict than the detail. Trump looks set to insist on a minimum average tariff of at
June 18, 2025 7:27 PM UTC
Though the SEP reduced growth forecasts and boosted inflation, the guidance from the Fed remains that policy is on hold in the coming meetings. Though the FOMC median still has two 2025 cuts, the breakdown shows that this was a close call and a lot of members see no cut or only 25bps. We look for
June 18, 2025 6:23 PM UTC
The FOMC has left rates unchanged at 4.25-4.50% as expected. The median rate forecast is unchanged at 3.9% for end 2025 but the FOMC now sees only 25bps of easing in 2026 rather than 50bps, with 2027 still seeing 25bps, but the end 2027 rate is now seen at 3.4% from 3.1%, leaving a slightly hawkish
June 17, 2025 3:02 PM UTC
We expect a 0.1% rise in May’s core PCE price index, matching to core CPI, continuing to show limited tariff pass-through. Subdued data are also likely from personal income, which we expect to be unchanged, and personal spending, where we expect a 0.1% decline.
June 17, 2025 12:50 PM UTC
May retail sales with a 0.9% decline are slightly weaker than expected. The ex auto data at -0.3% and ex auto and gas at -0.1% are negative too, though the control group which contributes to GDP was resilient with a 0.4% rise.
June 16, 2025 12:07 PM UTC
We expect a 0.7% decline in May retail sales as auto sales show a sharp reversal from recent strength. Ex autos we expect a subdued 0.1% increase, with a 0.2% rise ex autos and gasoline. Both of these outcomes would match those of April.
June 12, 2025 7:17 AM UTC
We attach a 65% probability to a U.S./China reaching a new trade deal that reduces the minimum overall tariff to 15-20% imposed by the U.S., most likely agreed in Q4 2025 and to be implemented in 2026. However, a 35% probability exist of no deal and this could eventually mean higher tariffs (Fig
June 11, 2025 6:28 PM UTC
May saw a budget deficit of $316bn, down from $347.1bn in May 2024, though the deficit in the fiscal year to date of $1364.7bn is up from $1202.3bn in the eight months to May 2024. The 12-month average has however slipped below $2trillion for the first time in the current fiscal year. The deficit in
June 11, 2025 4:01 PM UTC
The June 18 FOMC meeting looks highly likely to leave rates unchanged at 4.25-4.5%. We expect only marginal changes to May’s statement and the Fed’s median forecasts from March, with no change at all in the median dots on rates. Chairman Powell at the press conference may welcome recent signal
June 11, 2025 12:59 PM UTC
May CPI has surprised significantly to the downside, up only 0.1% both headline and core, with the respective gains before rounding being 0.08% and 0.13%. The data is subdued across the board, with commodities ex food and energy unchanged despite tariffs and services ex energy on the low side of tre
June 10, 2025 1:03 PM UTC
We expect May CPI to increase by 0.2% overall and by 0.3% ex food and energy, the core rate still seeing a modest impact from tariffs given a Q1 inventory build up and uncertainty over low long tariffs will persist, though at 0.32% before rounding we expect the strongest rise in the core rate since
June 10, 2025 9:00 AM UTC
The large U.S. budget deficit has helped push up 10yr real yields to 2% in 2024/2025, but both the budget deficit (heavy issuance) and government debt trajectories (sustainability and rating concerns) are key going forward if the 10yr budget bill passed is similar to the House Bill. Foreign acco