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

No Rush to Ease: RBI Flags External Risks, Holds Policy Steady

August 6, 2025 4:39 PM UTC

The RBI held the policy rate at 5.5% in its August 2025 meeting, opting for a strategic pause after front-loading 100bps of cuts earlier this year. While inflation has dropped sharply, global trade risks and sticky core prices argue against further easing for now. The central bank’s neutral stance

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

Tariffs and Tensions: India Holds Its Ground Amid US Pressure

August 4, 2025 5:17 AM UTC

India has responded firmly to US tariff escalation, defending its strategic autonomy on Russian oil and domestic market protections. The economic hit is manageable, but the geopolitical signal is clear: India won’t yield under pressure. Talks will continue, but New Delhi won’t trade core interes

RBI to Hold in August as Policy Cycle Enters Pause Phase

August 4, 2025 4:00 AM UTC

The upcoming RBI August meeting is not about action, but observation. With macro indicators largely aligned and risks tilting toward caution, a rate hold by the RBI is expected. Inflation remains subdued, but growth is resilient—requiring no immediate policy move

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

The India–UK Free Trade Agreement: Big Win or Big Gamble?

July 28, 2025 4:37 AM UTC

India and the UK have signed a landmark Free Trade Agreement aimed at doubling bilateral trade by 2030. The deal grants India near-total duty-free access for its goods, boosts prospects for agriculture, textiles, and services, and safeguards sensitive sectors. It also signals New Delhi’s evolving

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

No Deal Yet: India–US Trade Talks Stretch Beyond August Deadline

July 24, 2025 5:42 AM UTC

India and the US have made progress in negotiations for an interim trade deal, but key sticking points—particularly around agriculture and autos—remain unresolved ahead of the August 1 deadline for new US tariffs. President Trump’s tariff-first strategy has pushed India to seek partial relief,

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

India CPI Preview: Inflation Set to Ease Further in June

July 11, 2025 12:00 PM UTC

India’s retail inflation is likely to drop further in June to 2.7% y/r/yr supported by lower food prices and high base effects. This will allow RBI sufficient room to cut interest rates further in H2-2025. 

Negotiating the Fine Print: India’s Calculated Stance in US Tariff Talks

July 11, 2025 7:29 AM UTC

India and US continue to negotiate a favourable deal with August 1 as a firm deadline. India will remain unwilling to compromise on key sectors such as agriculture and dairy but concessions for auto sector are likely. However, no deal will be signed without certain benefits for Indian exporters as w

U.S. Assets and Valuation

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

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

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

Asia/Pacific (ex-China/Japan) Outlook: Slower Trade, Softer Inflation, and Looser Policy

June 24, 2025 9:24 AM UTC

·       Asia’s growth profile in 2025 reflects a region navigating structural transition amid external strain. Investment-led economies like India are benefitting from infrastructure spending, industrial policy momentum, and political continuity. In contrast, trade-reliant markets such as V

Equities Outlook: Choppy Then 2026 Gains

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

Iran: Measured Next Steps?

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

India CPI Review: CPI at 2.82%: Disinflation Deepens, But Risks Linger

June 13, 2025 7:18 AM UTC

India’s retail inflation dropped to a six-year low of 2.82% in May, driven by easing food prices and supported by favourable base effects. While disinflation continues to create monetary space, RBI's next rate cut will be data driven. 

Trump Tariffs: China and July 9 Reciprocal Deadline

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

Asia Country Risk Ratings

June 5, 2025 10:00 AM UTC

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

India GDP Review: Growth Outpaces Expectations as Q4 GDP Hits Four-Quarter High

June 2, 2025 11:56 AM UTC

India’s economy grew 7.4% y/y in Q4 FY25, beating expectations and capping full-year growth at 6.5%. Strong gains in construction, services, and agriculture underpinned the recovery, while private consumption and investment strengthened. However, sustaining momentum in FY26 will hinge on broad-bas

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

Big EM’s: Cyclical Tariff Hit V Structural Drivers

May 16, 2025 10:00 AM UTC

China, India and Brazil are all seeing cyclical slowdown for varying reasons, with China likely to be hardest hit by adverse net exports due to Trump’s tariff wars. Though financial repression in China can allow further fiscal stimulus, the household sector and residential property investment are

Trump Tariffs: China and UK Precedents

May 12, 2025 8:02 AM UTC

 The U.S./China have announced major reductions in reciprocal tariffs to 10% with other measures postponed for 90 days.  Though the U.S. is still imposing an extra 20% due to fentanyl, China will likely make some moves that could also help to reduce this.  This is in line with our previous thinki

Ceasefire or Reset? India Redraws the Rules

May 12, 2025 6:05 AM UTC

India and Pakistan have entered a fragile ceasefire after a week of precision strikes, drone warfare, and missile exchanges. But New Delhi’s clear message—that future terror attacks will be treated as acts of war—marks a strategic shift. Deterrence in South Asia has a new author, and India is

A Windfall with Caveats: RBI’s Likely Record Dividend

May 9, 2025 2:00 PM UTC

India is set to receive a record INR 3–3.5tn dividend from the RBI, offering a fiscal cushion amid softening tax revenues and rising geopolitical tensions with Pakistan. While this windfall may help the government stick to its 4.4% fiscal deficit target for FY26, it also highlights India’s growi

India CPI Preview: Cooling Prices, Warming Room for Rate Cuts

May 9, 2025 9:48 AM UTC

India’s retail inflation likely fell to 3.2% in April, its lowest since 2019, driven by a sharp decline in food prices. The benign inflation print strengthens the case for another RBI rate cut as growth momentum softens. 

Deterrence on a Deadline: India, Pakistan, and the New Escalation Paradigm

May 9, 2025 6:29 AM UTC

India and Pakistan are now embroiled in their most serious military confrontation in years, with hostilities expanding across air, land, and unmanned domains. Following the May 7 cross-border strikes under Operation Sindoor, India launched a calibrated military offensive on Thursday targeting Pakist

Tariff Man

May 6, 2025 8:45 AM UTC

  With the U.S. equity market having rebounded, President Donald Trump instinct on tariffs have seen threats of pharma tariffs and a 100% tariff on non U.S. films. Slow progress is also reported on bilateral deals, despite White House PR spin.  However, Trump will see pressure rising from three so

Transit Revoked, Ties Recalibrated: What Bangladesh's Pivot Signals

May 6, 2025 5:32 AM UTC

India’s revocation of transhipment access to Bangladesh marks a broader shift in bilateral ties, driven by Dhaka’s strategic pivot towards China and Pakistan. The move reflects India’s growing unease over regional security and the erosion of mutual trust post-regime change in Dhaka. For India,

Standoff Renewed: India and Pakistan Edge Closer to the Brink

May 6, 2025 3:33 AM UTC

India–Pakistan tensions have sharply escalated following a deadly terror attack in Kashmir, prompting sweeping diplomatic, military, and economic measures on both sides. New Delhi has ordered mock civilian defence drills and restricted the flow of river Chenab. Additionally, ceasefire violations a

From Tariffs to Technology: JD Vance’s Four-Day Engagement in India

April 28, 2025 6:24 AM UTC

US Vice President JD Vance’s visit to India marked a shift toward a more pragmatic and parity-driven partnership. While reinforcing trade, defence, and energy cooperation, the trip also highlighted the difficult negotiations ahead. 

India Redraws Its Red Lines with Pakistan

April 24, 2025 10:24 AM UTC

In one of the deadliest attacks in Kashmir in years, 26 Hindu tourists were killed by Pakistan-backed militants in Pahalgam. India has responded by suspending the Indus Waters Treaty, expelling Pakistani nationals, and downgrading diplomatic ties — signalling a hard shift in its Pakistan policy. T

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

Trump Under Pressure

April 23, 2025 7:15 AM UTC

A deteriorating economic; volatile financial markets and weakening approval ratings are all putting pressure on the Trump administration to do trade deals.  However, Trump instincts means he still likes tariffs, while negotiations will not be quick with China restraints and non-tariffs list desired

Foreign Official U.S. Treasury Holders: The Kindness of Strangers

April 22, 2025 7:30 AM UTC

Official holdings of U.S. Treasuries show a mixed picture with China, Brazil and Saudi Arabia well off peak holdings. Two drivers of some of these country flows are the peak in global central bank FX reserve holdings in 2021 and an increased holdings of other currencies in the last decade.  Neverth

India's Industrial Chill: 2.9 % Growth Signals Cooling Engines

April 17, 2025 1:05 PM UTC

India’s factory growth hit the brakes in February, with industrial production rising just 2.9 %, half January’s pace and the slowest since August 2024. Manufacturing and mining lost traction, while a small pickup in electricity output provided limited relief. Stalling consumer‑goods output an

Nervous U.S. Long Term Asset Holders

April 15, 2025 8:30 AM UTC

   Overall, foreign equity investors can no longer count on U.S. exceptionalism and could face lower long-term corporate earnings growth, which at a minimum will likely slow net inflows.  Bond investors also face ongoing policy volatility, which likely means a need for an extra risk premium – t