Macro and Market Implications of 'Super' El Nino Risks

July 1, 2026 8:08 AM UTC

El Nino, and a potentially severe one, is increasingly looking like a central scenario rather than a tail risk for 2026-27.
2026-27 El Nino is shaping up to be strong enough to matter, at least for scenario planning. 
The key facts are broadly: Australia, New Zealand, Indonesia and South Africa are l

Mexico: Banxico Pause, But MXN and USMCA Renegotiations

June 26, 2026 7:04 AM UTC

·       As expected Banxico left the policy rate unchanged at 6.50%, with the focus now on the lagged benefit of easing and also what will happen with the USMCA negotiations.  Banxico will likely keep the current policy rate through end 2026, given concerns that the Fed could tighten – eve

Outlook Overview: Cyclical and Structural Forces

June 24, 2026 7:00 AM UTC

·       The difference between 2nd round inflation effects from higher energy prices and 1st round effects that central banks can look through swings on whether the Straits of Hormuz will remain open in the coming months after the U.S./Iran interim agreement (here). Despite some tensions, we

Central and Latin America: Country Risk Ratings

June 9, 2026 10:00 AM UTC

We provide country risk reviews for select Central and Latin America countries.  

Mexico Country Risk Rating

June 3, 2026 9:10 AM UTC

Mexico’s overall risk is medium-high.

Big EM: Diverging Fiscal Trends

April 28, 2026 12:35 PM UTC

·       EM government bond spreads are controlled as 2nd round inflation effects are likely to be less than 2022, due to less buoyant domestic demand/slacker labour markets and less global supply chain pressure ex oil/oil products.  Brazil is expected to cut rates and others will likely not

2-Week Ceasefire, Then?

April 8, 2026 10:09 AM UTC

·       The ceasefire will likely involve a new normal of shipping companies paying Iran a toll.  While this is adding a cost to Gulf crude oil/products and LNG, the premium will be a lot lower than the cost of an ongoing war.  The U.S. and Iran will now likely be reluctant to restart the w

Markets: Short vs Long Iran War

March 30, 2026 8:00 AM UTC

·       For a 4-8 week war and 3-4 quarters of energy price normalisation, we see a 10% U.S. equity market correction in H1 2026 driven by the current Iran war and/or consumption slowing due to lower (real) wage growth, alongside still stretched valuations in equity and equity-bond terms.  T

Mexico: March 25bps Cut, Then September?

March 27, 2026 8:01 AM UTC

Banxico decided to cut the policy rate by 25bps from 6.75% due to concerns over the economy, which could be hurt additionally by the Iran war.  However, Banxico inflation forecasts are yet to reflect the shift in oil prices and the prospect of further upward revisions argue against a May or June cu

EM FX Outlook: Weathering the Storm

March 25, 2026 8:45 AM UTC

·       EM currencies have seen a correction against the USD since the risk off prompted by the Iran war, but our baseline remains for a 4-8 week war (here) followed by energy prices only returning to pre-war levels by 2027 -- with WTI down to USD80-85 by June; USD65-70 end 2026 and USD60 by

Outlook Overview: Iran War and AI Challenges

March 23, 2026 4:39 PM UTC

·       The Iran war macro impact depends on length of the conflict and impact on energy flows. Our baseline is for a 4-8 week Iran war, with WTI down to USD80-85 by June; USD65-70 end December and USD60 by Q3 2027 (here).  The jump in oil and gas prices mean at least a temporary increase in

Central and Latin America: Country Risk Ratings

March 5, 2026 11:00 AM UTC

We provide country risk reviews for select Central and Latin America countries.  

Reciprocal Tariffs: Supreme Court Strike Down

February 20, 2026 4:31 PM UTC

·        The 6-3 vote by the Supreme court and full ruling against reciprocal tariffs means that the Trump administration will likely resort to other tariffs for negotiating leverage.  However, the Trump administration will also pressure to codify existing trade framework deals that have be

Mexico: March Pause Rather Than Cut?

February 6, 2026 7:52 AM UTC

Banxico paused as expected, but revised the peak in inflation to 4% from 3.7% and pushed back the forecast of when inflation is expected to hit the target. Though the economy is still expected to be below trend in 2026, the inflation/growth tradeoff is causing Banxico members to debate whether furth

Reciprocal Tariffs: Supreme Court Ruling and The Aftermath

January 8, 2026 8:05 AM UTC

·        A Supreme Court ruling, partially or in full against reciprocal tariffs, would not produce a major slowdown in U.S. inflation or boost to growth, as the Trump administration would be full of threats for replacement tariffs – Trump would be worried about the loss of negotiating pow

Markets 2026

January 6, 2026 9:58 AM UTC

•    For financial markets, the muddle through for global economics and policy provides support for risk assets, combined with solid earnings prospects from some of the magnificent 7.  However, U.S. equities are once again significantly overvalued and we look for a 5-10% correction in 2026, b

Mexico: 25bps Cut and Now Pause

December 19, 2025 8:15 AM UTC

Banxico cut by 25bps to 7.0% as expected with a downward revision to 0.3% for 2025 GDP growth. Below trend GDP is forecast in 2026 and we see this prompting further easing in March and June 2026 by 25bps each, but MXN weakness restraining Banxico pace.  We then see Banxico going on hold for the rem

EM FX Outlook: High Real Yields Still Help

December 18, 2025 12:14 PM UTC

•    EM currency 2026 prospects come against a backdrop of a further but slower USD depreciation against DM currencies, but inflation differentials, domestic central bank policy and politics also matter.  We forecast the Mexican Peso (MXN) will likely be more volatile, as President Donald Tru

Outlook Overview: Turbulent Times

December 17, 2025 7:44 AM UTC

·        The U.S. slowdown remains in focus as the lagged effects of President Trump’s tariff increases continues to feedthrough, though our baseline is for a 2026 soft-landing.  The Supreme court will likely rule against part of Trump’s reciprocal tariffs, which will create short-term

Americas First: New National Security Strategy

December 9, 2025 8:40 AM UTC

·       The new NSS at one level reads like a Trump/MAGA current list of topics and desires, that may not translate into policy or a major shift of military assets.  Trump has blown hot and cold on Europe and China over the past 12 months and could shift again.  Nevertheless, the NSS does r

Central and Latin America: Country Risk Ratings

December 5, 2025 11:00 AM UTC

We provide country risk reviews for select Central and Latin America countries.  

USMCA Renegotiation: Hostage To Trump

November 27, 2025 2:55 PM UTC

•    Trump could decide to go on an early offensive over the July 2026 USMCA review or could wait until after the November congressional elections to act tough given it could cause new cost of living fears for U.S. voters.  This could mean that at times the USMCA negotiations are upsetting fo

U.S. Asset Inflows After April’s Trump Tariffs

November 21, 2025 8:00 AM UTC

·       Net foreign portfolio inflows have not been hurt by Trump’s April tariff drama, with the AI and tech boom attracting new equity inflows.  Flows could become more volatile with a U.S. equity bear market or recession, but these are modest risk alternative scenarios rather than high r

Markets 2026

November 18, 2025 10:30 AM UTC

·        The Fed, ECB and BOE will likely drive further 10-2yr government bond yield curve steepening, with 10yr Bund yields rising due to ECB QT and German fiscal expansion. 10yr JGB yields are set to surge through 2%, as BOJ QT remains excessive and underestimated.  The BOJ could partiall

Banxico: December In Doubt and Pause Closer

November 7, 2025 9:56 AM UTC

The December Banxico meeting is not guaranteed to see a further 25bps cut, with the November Banxico statement showing more caution over persistent core inflation pressures and given the cumulative easing already seen. Combined with the risk of a Fed pause in December, plus Banxico’s Mexican Peso

U.S./China Trade Framework: Avoiding Escalation

October 31, 2025 7:48 AM UTC

·         The U.S./China framework deal avoids renewed escalation of trade tension, but is unlikely to be followed by a comprehensive trade deal in 2026 as China does not want major import and bilateral trade commitments.  The economic effects will likely be small and the deal main aim app

Trump Tariffs: China, Mexico and Semiconductors

September 30, 2025 8:00 AM UTC

  ·       Our baseline (60% probability) remains that a U.S./China trade deal will be agreed in Q4/Q1 2026 and it is possible though unlikely that this could be announced at the Trump/Xi meeting at the October 31 APEC summit – China requests that the U.S. changes policy on Taiwan could slo

Banxico Review: Slower Pace for 25bps Cuts

September 26, 2025 6:39 AM UTC

Banxico cut by 25bps to 7.5%. However, Banxico pushed up the near term inflation forecasts, which could mean that the November 6 meeting does not see a rate cut but rather Banxico waits until the December 18 meeting.  This is our view and we look for 25bps to 7.25%.  We then see two further 25bps

Outlook Overview: Into 2026

September 23, 2025 8:25 AM UTC

·       The critical question is how much the U.S. economy is slowing down with the feedthrough of President Donald Trump’s tariffs to boost inflation and restrain GDP growth, with the effective rate currently around 17% on U.S. imports. Though semiconductor tariffs are likely, the bulk of

Central and Latin America: Country Risk Ratings

September 8, 2025 10:00 AM UTC

We provide country risk reviews for select Central and Latin America countries.  

Mexico: Further 25bps Cuts Ahead

August 8, 2025 6:44 AM UTC

Banxico forward guidance, plus trade policy risks with the U.S. now see us forecasting an end 2025 policy rate at 7.25% with two 25bps cuts in September and December. We now feel that the risks to 2026 growth will encourage Banxico to move the policy rate down to 6.5% by spring 2026 by two 25bps rat

EM Rates: Domestic Fundamentals Dominate

August 7, 2025 9:30 AM UTC

Once trade is agreed with the U.S., the good fundamentals actually argue for a 10yr Mexico-U.S. spread close to 400bps and this is our favored strategic risk reward for big EM government bonds. In Brazil a case can be made for a 12.75% policy rate end 2026 and 10% in 2027, but this could only mean 1

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

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

Food Glorious Food

July 28, 2025 10:15 AM UTC

·       Global food prices should see small increases in the future, as production continues to rise broadly in line with increasing demand driven by population and a rising consumption per person in EM countries.  However, China will remain dependent on food imports given it has limited roo

EM Currencies with a USD Downtrend

July 24, 2025 10:15 AM UTC

·       BRL, ZAR and MXN have been helped by FX carry trades and bond inflows on still wide interest rate differentials.  However, actual reciprocal tariff risks are high for all three countries and a wave of profit-taking could be seen.  Elsewhere, though we see a U.S./China trade deal by

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

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

Trump Tariffs: Poker Face?

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

Mexico: Back Toward Neutral Policy Rates

June 27, 2025 6:56 AM UTC

Banxico has cut by 50bps to 8.00%, while also signalling in its statement that further easing will now be data dependent. Our forecast is for easing to move to a 25bps pace and to come once a quarter – most likely in September and December. Some improvement in the monthly inflation trajectory woul

June Outlook: Trump’s Fluid Policies

June 25, 2025 10:00 AM UTC

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

EM FX Outlook: USD Less in Favor, but EM Mixed

June 25, 2025 8:05 AM UTC

•    EM currencies face cross currents on a spot basis.  The USD downtrend against DM currencies can be a positive for undervalued or strong EM currencies.  This could benefit the Brazilian Real (BRL), Mexican Peso (MXN) and Indonesian Rupiah (IDR), though moves will be choppy with occasiona

Outlook Overview: Trump’s Fluid Policies

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

Central and Latin America: Country Risk Ratings

June 3, 2025 10:00 AM UTC

We provide country risk reviews for select Central and Latin America countries.  

Trump’s 50% Steel And Aluminum: Negotiating Leverage?

June 2, 2025 7:42 AM UTC

•    President Donald Trump increase in steel and aluminum tariffs from 25% to 50% is not just about boosting the steel and aluminum industry.  It also a demonstration that Trump remains in control of tariffs and can aggressively change tariffs to increase negotiating leverage.  It is a mess

Court Stops Trump Reciprocal and Fentanyl Tariff

May 29, 2025 7:18 AM UTC

•    The Trump administration will likely follow a multi-track response by appealing the judgement but also fast-tracking section 232 product tariffs for pharmaceuticals and semiconductors.  The administration could also consider section 301 or 122 tariffs (the latter 15% for 150 days against c

Mexico’s GDP Review: Saved from the Technical Recession, but Growth Slows

April 30, 2025 2:52 PM UTC

Mexico narrowly avoided a technical recession in Q1 2025 with 0.2% GDP growth, driven by a volatile rebound in agriculture. However, industrial output contracted and services stagnated, highlighting a broader economic slowdown. Uncertainty over potential U.S. tariffs and tight monetary and fiscal po

USD Rebalancing: Some to EM?

April 24, 2025 8:30 AM UTC

Some portfolios rotations towards EM assets will likely be evident, as we see the USD decline is now extending and broadening.  However, flows will likely be selective, both given underwhelming EM performance in the last 5-10 years and the uncertainty over how much Trump will reduce reciprocal tari