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

Outlook Forecasts to download in Excel

March 26, 2026 12:10 PM UTC

Below is an Excel file that contains our headline forecasts for GDP, Inflation, Monetary Policy, and Exchange Rates.

March Outlook: Iran War and AI Challenges

March 26, 2026 7:17 AM UTC

Our March Outlook is now published and please see all our economic and policy chapters below.  

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

China Outlook: Cyclical and Structural Headwinds

March 24, 2026 7:30 AM UTC

·       Our baseline scenario of a 4-8 week war (here) is not a problem, aside from higher prices.  We have pushed up our 2026 CPI forecast to 1.4% from 0.5% (higher food prices are also an issue), but as oil/gas prices come down, this suggests very subdued 2027 inflation, which we have cut

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

Equities Outlook: Navigating Cyclical and Structural Forces

March 23, 2026 4:15 PM UTC

·        For global equities, our baseline (here) is for a 4-8 week Iran war, with WTI down to USD80-85 by June; USD65-70 end 2026 by June and USD60 by Q3 2027.  A fragile situation will mean it will take until 2027 for energy prices to return to pre-war levels. On a multi-quarter basis thi

Iran War Scenarios Updated

March 23, 2026 3:04 PM UTC

·       Our central scenario remains a 4-8 week war in Iran. Trump’s loathing of long wars and high gasoline prices will likely prompts the U.S. to declare victory.  A formal ceasefire is unlikely, but the end of hostilities could see an informal understanding of the Straits of Hormuz for

China: Modest Bounce at Start of 2026, But

March 16, 2026 8:49 AM UTC

·       Though the January-February data was better than expected, we expect high oil prices and an adverse effect from the Iran war to hurt China’s export growth.  We still feel that the economy remains too dependent on high tech manufacturing and modest consumption will act as a drag on

Trump Visit To China: Trade/Taiwan and Iran

March 12, 2026 11:37 AM UTC

•    The main success of Trump’s visit will be on trade, where an extension of October trade truce is likely.  China wants to avoid section 301 tariffs that could increase the current effective tariff of 25% and the U.S. will turn the whole visit into a PR victory for Trump to deflect from

U.S. Trump - War will end soon

March 11, 2026 2:10 PM UTC

Trump's latest comments suggest he is unwilling to risk prolonged economic damage from continuing the conflict.

Iran War Scenarios

March 11, 2026 9:45 AM UTC

·        Our central scenario (75%) remains a multi-week war in Iran. Trump loathing of long wars and high gasoline prices prompts U.S. to declare victory before end of March.  Israel and Iran would most likely agree an effective ceasefire.  The ceasefire would be fragile, however, as it w

Asia Country Risk Ratings

March 10, 2026 11:00 AM UTC

We provide country risk reviews for Asia countries including China, India, Indonesia, Taiwan and Phillipines.  

Trump’s Fiscal Dominance

March 10, 2026 10:35 AM UTC

·       Voting will be done by 12 FOMC members and while Kevin Warsh could mellow some centrists, 5 district Fed presidents and Barr/Jefferson are at the Fed until at least 2031. Warsh may merely bring interest rate cuts sooner from June or potentially engineer a small dip below the 3% neutra

Gulf Countries U.S. Investment Deals Risks

March 9, 2026 8:05 AM UTC

·       Lower budget revenue and a multi-year hit to tourism and the Gulf role as air transit hubs, could see delays and reduction in some parts of the Gulf states USD3.4 trillion deals with the Trump administration. The economic effects on the U.S. would likely be small and the geopolitics b

China: 4.5-5.0% GDP Growth for 2026

March 5, 2026 9:16 AM UTC

•    China announced a central government budget deficit at 4% of GDP, which is the same as last year and points to only modest fiscal stimulus.  Though investment was supported, consumption trade in programs were cut from Y300bln to Yuan250 and no new structural safety net for households hav

Markets and the Iran War

March 4, 2026 9:50 AM UTC

•    The Trump administration’s objective appears to be pivoting from regime change to hurting Iran ballistic missile capabilities, which argues for a 2-4 week war rather than a prolonged war.  However, the most intense missile battles will likely occur in the next one week and markets are

China: Yuan Appreciation; U.S. 301 Threat and 4.5-5.0% GDP Growth for 2026?

March 3, 2026 6:35 AM UTC

•    The Yuan has continued to appreciate with no resistance from China authorities. Part of this is a willingness to allow a modest Yuan appreciation in the face of the huge China trade surplus and pressure from U.S./Europe/IMF and others over an undervalued Yuan, but appreciation is also des

Iran: What Length For War?

March 2, 2026 7:44 AM UTC

·       If the war is short (ie 1-2 weeks) and leads to a ceasefire then the global economic impact will be small, with the greatest impact in the middle east of oil/gas supplies on a temporary basis and tourism.  If the war is more prolonged (ie months)  then oil/gas supplies could be sque

China: Housing Not Bottomed Yet

February 25, 2026 10:55 AM UTC

•    We do not feel that China residential property market has bottomed, as it faces two cyclical and two structural headwinds.  Cyclically outstanding inventory of complete houses remains high, while households are also suffering from low income and employment growth.  Structurally populati

Iran: Limited U.S. Attack?

February 24, 2026 10:00 AM UTC

 ·       Iran authorities appear reluctant to meet the Trump administration’s demand to stop nuclear fuel production for potential weapons.  This increases the odds of a limited attack by the U.S. on Iran to 30-40% (Figure 1), which could occur as soon as this weekend.  The most likely I

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

Taiwan: Trade Deal with U.S. and China Grey Warfare

February 18, 2026 11:55 AM UTC

·        The most likely option for China is to continue the air and naval grey zone warfare around Taiwan, combined with support for pro-China factions in Taiwan’s parliament to build pressure for reunification at some stage before 2049 (the 100th anniversary of the communist party).  Wi

China: Boosting Consumption In March?

February 17, 2026 2:05 PM UTC

·       China’s consumption medium term could be boosted by higher structural safety nets (social spending/health/pensions) and revisions to the Hukou system (shifting 200mln urban workers from lower rural to higher urban benefits). However, March NPC will likely see only further small to m

Cuba: Pressure Grows

February 12, 2026 8:05 AM UTC

·       The Donroe doctrine has pressured Mexico into halting oil exports to Cuba, which is intensifying pressure on Cuba’s regime.  While chaos and attempted mass immigration is a risk, the baseline is for a negotiated deal as U.S./Cuba discussions deepen – though with the added complex

U.S. Inflows: Portfolio Dominates

February 4, 2026 12:05 PM UTC

·        Portfolio flows have dominated U.S. C/A financing looking at the breakdown of the balance of payment data (BOP), with no material slowdown in 2025 from foreign investors. U.S. investors did accelerate buying of overseas equities but this was counterbalanced by slower U.S. buying of

Europe Nuclear Weapons; NATO and Greenland

February 3, 2026 11:05 AM UTC

·        Without the U.S. nuclear weapon umbrella, Europe’s nuclear deterrent is too weak. Secondly, European countries are highly reliant on U.S. missile defense, command, intelligence and reconnaissance, which military experts estimate could take 10 years to replace. Major European count

Markets: Profit-Taking or More?

February 2, 2026 9:22 AM UTC

•    For now we see some further profit-taking on risky positions in gold/silver/copper/equities and short USD positions.  However, a bigger macro catalyst is required to produce a deep correction in equities and major risk off.  The nomination of Kevin Warsh for Fed chair is unlikely to be

U.S. Bessent - Trying to undo damage from Trump comments

January 28, 2026 3:34 PM UTC

Treasury Secretary Bessent is trying to calm Trump-generated market worries over the USD and the Fed, though is less than conciliatory to Canada.

Trump’s Problems

January 28, 2026 8:35 AM UTC

Overall, the Trump administration’s hyperactive start to 2026 is unlikely to achieve success on the number one issue for voters in the shape of cost of living concerns.  Meanwhile ICE’s immigration tactics in Minnesota are causing concerns among swing voters, though Trump geopolitical adventuri

U.S. Trump - Not concerned about the USD decline

January 27, 2026 9:01 PM UTC

Trump, seeking to boost US export competitiveness, has encouraged USD sellers, but the comments carry risks for inflation. 

U.S. Trump - Greenland TACO

January 21, 2026 7:47 PM UTC

Trump, after backing away from using force, has now backed off the tariffs threatened on eight European nations over Greenland, lifting bonds and equities further.. 

U.S. Trump - Suggests Hassett will not be next Fed Chair

January 16, 2026 3:38 PM UTC

Trump's comments have markets hoping Trump will appoint someone seen as more committed to Fed independence.

China: 2026 Modest Rather Aggressive Policy Support

January 15, 2026 10:55 AM UTC

•    On January 15, PBOC cut the 1yr structural lending rate from 1.5% to 1.25% in a targeted move to benefit some borrowers from banks.  Monetary policy will likely remain targeted rather than broad and we see only one 10bps cut in the 7 day reverse repo rate in 2026, as policymakers are con

Taiwan: Worst Case Consequences

January 13, 2026 3:26 PM UTC

·        The most likely option for China is to continue the air and naval grey zone warfare around Taiwan, combined with support for pro-China factions in Taiwan’s parliament to build pressure for reunification at some stage before 2049 (the 100th anniversary of the communist party).  Wi

Maximum Trump

January 12, 2026 9:55 AM UTC

·       Overall, though Trump action can cause volatility in financial markets, the major issues remain the performance of the U.S. economy and whether the current scale of AI optimism will remain.  Monthly TICS data since the April reciprocal tariffs show that global investors continue inwa

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

January 7, 2026 8:05 AM UTC

·       Trump will likely go for more pressure and then seek to negotiate with Denmark and Greenland.  Denmark and Greenland already have mutual interests with the U.S. on security; minerals and Russia/China that are already covered by previous agreements and understandings.  Trump would li

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

Venezuela: Oil and Geopolitics

January 5, 2026 12:02 PM UTC

·       Venezuela’s oil production will likely take years to increase substantively due to poor infrastructure, the need for substantive investment, and a lack of democratic political stability.  In terms of geopolitics, operations in Venezuela reinforce the Trump administration’s pivot

December Outlook: Turbulent Times

January 2, 2026 8:10 AM UTC

Our December Outlook is now published and please see all our economic and policy chapters below.  

December Outlook: Turbulent Times

December 22, 2025 8:10 AM UTC

Our December Outlook is now published and please see all our economic and policy chapters below.  

Outlook Forecasts to download in Excel

December 19, 2025 10:31 AM UTC

Below is an Excel file that contains our headline forecasts for GDP, Inflation, Monetary Policy, and Exchange Rates.

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

China: Weak Growth

December 15, 2025 7:39 AM UTC

•    November figures show weak growth and are a concern for momentum going into 2026.  Retail sales continues to be hurt by adverse wealth effects and slow job and income growth.  Though the authorities are promising to boost consumption, we see this only being modest rather than aggressive

Equities Outlook: Choppy Up For 2026 and Down for 2027?

December 12, 2025 8:05 AM UTC

·        The U.S. equity market is underpinned by the bullish AI/tech story and a soft economic landing into 2026.  However, overvaluation is clear and this leaves the market vulnerable to a 5-10% correction on moderate bad news e.g. economic data.  We see the S&P500 having a choppy year a

China Outlook: Headwinds Get Stronger

December 11, 2025 10:30 AM UTC

·        Private domestic demand remains modest, with consumption ranging from modest to moderate (slowed by the housing wealth hit and soft jobs/wage growth) and investment further impacted by the ongoing adverse drag of the residential property bust. China’s authorities prefer a long and

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