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

U.S. Outlook: Fed Focus Turning To Downside Risks

September 23, 2024 2:16 PM UTC

•    The U.S. economy is showing clear signs of labor market slowing which poses downside risks to the still impressive resilience of consumer spending, which has sustained healthy GDP growth through Q2 2024. We expect GDP growth below potential in the second half of 2024 and the first half of

Israel/Hezbollah War Risks

August 26, 2024 8:02 AM UTC

The probability of an Israel/Hezbollah war in the next 12 months has move up from low to modest probability, but would be a high impact event geopolitically and for global markets.  For global markets, a distinction would be drawn between an Israel/Hezbollah war that did not involve Iran/U.S. and o

Powell Jackson Hole Guidance

August 23, 2024 2:38 PM UTC

  Fed Powell clearly signaled a Sep 18 FOMC cut, but his analysis on the economy is softer than harder landing.  Though the option of 50bps was not ruled out, the comments from Powell and other Fed officials are more consistent with 25bps than 50bps.  Nevertheless, the Fed is now more focused on

Fed Decision Making/H1 2025 Fiscal Tensions and Yield Curve Steepening

August 19, 2024 8:15 AM UTC

2yr U.S. Treasury yields can fall gradually by end 2025 to 3.25%, as a more neutral Fed Funds era is discounted.  10yr yields ability to decline on a soft landing is more difficult, given high net supply facing the market.  We also remain concerned that the U.S. will see some temporary fiscal stre

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

EZ and UK Government Bonds: Decoupling From the U.S.?

July 12, 2024 9:37 AM UTC

Different economic and inflation dynamics, plus no constraint from trade weighted exchange rates, means that the ECB and BOE can cut irrespective of the Fed in the coming quarters.  This can see 2yr yields decline, though less so in Germany where a 2.5% ECB depo rate is already discounted.  10yr y

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

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

U.S. Outlook: Economy Starting to Lose Momentum

June 20, 2024 6:17 PM UTC

•    The U.S. economy is starting to lose momentum after a surprisingly strong second half of 2023, and we expect the loss of momentum to become more apparent in the second half of 2024, causing a slowing in employment growth from its current strong pace. We expect inflation to resume a gradua

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

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

DM Rates Outlook: Rate Cuts Arriving and Positive Yield Curves

March 22, 2024 2:00 PM UTC

U.S. Outlook: Fed to Ease as Economy Gradually Slows

March 22, 2024 10:00 AM UTC

•    The U.S. economy has continued to see growth surprising to the upside supported in particular by consumer spending. While the momentum of the second half of 2023 will be difficult to sustain the economy now looks poised for a soft landing, with risk that continued resilience in the econom

Preview: Due January 11 - U.S. December CPI - Marginally above 0.2% before rounding

January 10, 2024 2:00 PM UTC

We expect December CPI to increase by 0.2% overall and ex food and energy, with risk being for higher rather than lower, with our forecasts before rounding being 0.22% overall and 0.24% ex food and energy.

Shipping Freight Cost Jump and Inflation – Some Perspectives

January 9, 2024 2:24 PM UTC

Bottom Line: The attacks on Red Sea shipping have already triggered a marked rise in freight costs, and more broadly than just for the Red Sea route.  Thus has led to some worries about the possible fresh upside risks to what have recently been sharply falling CPI inflation rates.  These worries a

AI and Technology Impact on Growth and Inflation

January 3, 2024 10:30 AM UTC

Bottom Line: The full benefits of the latest AI wave will likely not kick in until the late 2020/early 2030’s.However, 5G over the last couple of years has been enabling more connectivity via the Internet of Things and allowing more big data analysis, including AI tools and algorithms. In the 2hal

Preview: Due January 11 - U.S. December CPI - Marginally above 0.2% before rounding

January 2, 2024 5:03 PM UTC

We expect December CPI to increase by 0.2% overall and ex food and energy, with risk being for higher rather than lower, with our forecasts before rounding being 0.22% overall and 0.24% ex food and energy. 

Equities Outlook: Rate Cuts To Help in 2024

December 15, 2023 11:00 AM UTC

 U.S. equities face a volatile Q1 2024, both because the Fed are unlikely to ease in Q1 and because a slowing economy hurts corporate earnings forecasts.  With the market overvalued, a modest correction could be seen, though this would be sharper with a recession.  Gains should resume with Fed ra

DM Rates Outlook: Front End Favored

December 15, 2023 10:19 AM UTC

U.S. Outlook: Slower Growth to Sustain Improved Inflation Picture

December 15, 2023 10:01 AM UTC

Preview: Due December 12 - U.S. November CPI - Flat again overall but not quite as soft in the core

December 11, 2023 1:25 PM UTC

We expect November CPI to be unchanged for a second straight month, though ex food and energy we expect a 0.3% increase to follow October’s 0.2% rise. Before rounding however we expect a core rate of 0.26%, meaning that a second straight 0.2% rise is more likely than 0.4%.

December Government Bond Volatility

December 10, 2023 2:32 PM UTC

  Bottom Line: The Fed and ECB meetings are the most important for forward guidance this week, as they will set the tone for DM generally (BOJ is still seen to be a different phase and unlikely to have last impact on global DM government bond markets).  The Fed will likely try to restrain the scal

Preview: Due December 8 - U.S. November Employment (Non-farm Payrolls) - Slightly firmer due to returning strikers

December 7, 2023 12:46 PM UTC

We expect a 200k increase in November's non-farm payroll, stronger than October's 150k though excluding the impact of returning strikers the data will be consistent with a modest slowing. We do however expect a correction lower in the unemployment rate to 3.8% from 3.9% and a 0.3% rise in average ho

Navigating the Path to Peace: Saudi Talks on Ukraine-Russia Conflict

August 7, 2023 10:59 AM UTC

The ongoing conflict between Ukraine and Russia has been a global concern, with efforts continuously being made to find a peaceful resolution. In a recent development, Saudi Arabia hosted a summit in Jeddah last week that brought together top officials from around 40 countries, including key players

U.S. Outlook: No Recession, but Subdued Growth Will Help to Reduce Inflation

June 21, 2023 9:33 AM UTC

U.S. Outlook: Two Subdued Years for the Economy as Inflation Falls Only Gradually

March 27, 2023 12:43 PM UTC