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April 25, 2025

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U.S/China Trade Standoff: Odds Remain Towards Truce
Paying Article

April 25, 2025 7:09 AM UTC

  On balance, our baseline still remains a U.S./China trade deal (55-60%) being reached, given Trump deal instincts; China desire for a deal and the economic disadvantage of an economic cold war to the U.S. when it is trying to reset trade with all countries.  Timeline is Q4 2025 or H1 2026. An al

April 24, 2025

U.S. Fed's Waller - Tarrifs may cause job loss, and argue for easing
Paying Article

April 24, 2025 2:22 PM UTC

Fed's Waller continues his recent dovish tone, worries about tariffs causing job losses

U.S. Fed's Hammack - May too early, could move in June
Paying Article

April 24, 2025 1:06 PM UTC

Cleveland Fed President Beth Hammack is not ready to ease but sounds less hawkish than was the case in February.

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EZ HICP Preview (May 2): Headline Lower Again But Mainly Energy?
Paying Article

April 24, 2025 8:39 AM UTC

EZ HICP inflation is likely to fall back to the 2% target in flash April data, this six-month low would largely reflect a fall in fuel prices, but with services largely consolidating the clear fall seen last time around (Figure 1).  All of which would mean a stable core reading of 2.4% but where th

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USD Rebalancing: Some to EM?
Paying Article

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

April 23, 2025

U.S. Fed Beige Book Summary - Some signs of slowing on policy uncertainty
Paying Article

April 23, 2025 6:29 PM UTC

The latest Fed Beige Book shows activity little changed rather than increasing slightly while the labor market appears to have lost momentum. Inflationary pressures however persist. 

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BoE vs the (Weaker) Data
Paying Article

April 23, 2025 9:56 AM UTC

Amid what are now an ever broader array if indicators suggesting that the economy is stagnating, if not contracting the BoE has the opportunity to address this risks with three separate MPC speeches due later today.  Chief Economist Pill, Governor Bailey and Deputy Breeden can address the extent to

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Eurozone Flash GDP Preview (Apr 30): The Calm Before the Storm that Surveys May Be Flagging?
Freemium Article

April 23, 2025 9:18 AM UTC

Continuing a series of upside surprises, EZ GDP overshot both consensus and ECB expectations in Q4), albeit only after what was a cumulative 0.2 ppt upward revisions compared to the flash. We see a further rise in Q1 data (Figure 1), partly reflecting recent m/m increases in both manufacturing and s

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Trump Under Pressure
Paying Article

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

April 22, 2025

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German Data Preview (Apr 30): Lower Headline Amid Stable Services Inflation?
Freemium Article

April 22, 2025 1:16 PM UTC

Germany’s disinflation process continues, but there had been signs that the downtrend was flattening out but this changed somewhat in February and again in the March. Indeed, HICP inflation fell back from 2.6% to 2.3% in March, this despite a pick-up in food inflation in both months.  Notably the

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

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

April 17, 2025

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ECB Review: Discussing Policy Restriction No Longer Appropriate
Freemium Article

April 17, 2025 1:48 PM UTC

A seventh and widely expected 25 bp deposit rate cut was overshadowed by the ECB’s communication shift about the outlook hereafter, no longer talking about how restrictive policy may be.  This shift is entirely appropriate not least given the manner in which financial conditions are now tightenin

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Safe Havens Other Than the USD
Paying Article

April 17, 2025 8:30 AM UTC

The USD and U.S. Treasuries are currently not acting like safe havens, as the crisis is U.S. centric with the tariff debacle. 10yr Treasuries can regain safe haven status if a U.S. recession occurs, but U.S. equities are still clearly overvalued versus equity and equity-bond metrics.  We prefer Ind

April 16, 2025

U.S. Fed's Powell - May find dual mandate goals in tension
Paying Article

April 16, 2025 5:45 PM UTC

Fed's Powell continues to give a message of keeping policy steady near term.

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Bank of Canada - Proceeding carefully, but risks still lean towards further easing
Freemium Article

April 16, 2025 4:28 PM UTC

The Bank of Canada left rates unchanged at 2.75% as expected. The statement concluded that the BoC will proceed carefully, noting that monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war, but it can and must maintain price stability in Canada. While this shows cauti

Canada: BoC's Macklem - Less forward looking but prepared to act decisively
Paying Article

April 16, 2025 2:09 PM UTC

The BoC left rates unchanged as expected. They will proceed carefully but are prepared to act decisively, meaning their options are kept open.

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UK CPI Review: Inflation Respite Ahead of Likely Key April Surge?
Freemium Article

April 16, 2025 6:28 AM UTC

Although relegated by current market ructions and tariff threats, the main near-term inflation story was (and remains) what happens in the April data when a series of energy, utility, post office and some other regulated and service price rises are due, albeit now possibly offset somewhat by a fall

April 15, 2025

Canada March CPI - Correction lower led by travel costs
Paying Article

April 15, 2025 12:54 PM UTC

March Canadian CPI in falling to 2.3% yr/yr from 2.6% is significantly weaker than expected. Lower prices for gasoline and travel tours were cited as negative influences, the latter surely impacted by the unwillingness of Canadians to travel to the USA.  The BoC core rates are on balance slightly s

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Eurozone Banks Offer ECB More Cause for Concern
Freemium Article

April 15, 2025 11:14 AM UTC

The ECB can draw comfort from signs that credit demand and supply for EZ households continues to improve.  But the ECB’s latest bank lending survey (BLS) also offers worrying signs in regard to firms as well as questioning the alleged neutrality of the QT program.  It shows a further (admittedly

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UK Labor Market – A Tale of Two Labor Markets?
Paying Article

April 15, 2025 9:45 AM UTC

Policy-making is fraught with difficult decision making at the best of times.  But at present in the UK, such decisions are made all the more problematic given inconsistencies, if not conflicts, in the data backdrop, thereby making any reading of the economy all the more subjective.  Is employment

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Nervous U.S. Long Term Asset Holders
Paying Article

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

April 14, 2025

U.S. Fed's Waller - Would back a dovish approach if tariffs stay high
Paying Article

April 14, 2025 5:43 PM UTC

Fed's Waller suggest he would be more dovish if high tariffs persist, despite a likely inflation spike. 

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U.S./China High Stakes Poker
Paying Article

April 14, 2025 7:30 AM UTC

The economic hit from a hard stop in U.S. imports/exports is too damaging for both sides and our baseline is still for a truce and de-escalation, in the coming weeks. This could be negotiations on a new trade deal with a more moderate reciprocal tariff on both sides and the extra reciprocal tariffs

Trump's Tariff Impact for Japan and BoJ
Freemium Article

April 14, 2025 4:28 AM UTC

With the latest round of "universal" tariff, Japan is being hit again by double digit tariffs despite being the nice ally of the U.S. While we see little change of Japan's retaliation, it is worth looking into the impact towards the Japanese economy as auto export that is hit hard, is one of the maj

April 11, 2025

U.S. Fed's Williams - Sees 1% GDP, 3.5-4.0% inflation
Paying Article

April 11, 2025 3:12 PM UTC

Fed's Williams has outlined his economic expectations, and seems most concerned about those for inflation.

U.S. Fed's Collins - Hawkish on China tariffs
Paying Article

April 11, 2025 1:24 PM UTC

Fed's Collins sees inflationary risks from the China tariffs and is sounding hawkish.

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Volatile Treasuries But Economic and Foreign Holdings Key
Paying Article

April 11, 2025 9:30 AM UTC

Long-dated U.S. Treasury yields were being pushed up by deleveraging among leveraged players, before the 90 days pause on reciprocal tariffs easing deleveraging. Multi quarter the key question for yields is whether real sector data sees a soft or hard landing.  We see a slowdown to sub trend growth

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UK GDP Review (Apr 11): Marked Strength in Spite of Soft(er) Surveys
Freemium Article

April 11, 2025 6:40 AM UTC

UK data can be erratic, but the hugely unexpected surge in February GDP numbers (Figure 1) looks hard to fathom.  A 0.5% m/m jump suggests the economy grew by an annualized 6%-plus in the month.  This is hard to square against the message from surveys and other data such as that for the labor mark

April 10, 2025

U.S. Fed's Goolsbee - Fed's timetable is not the market's timetable
Paying Article

April 10, 2025 4:45 PM UTC

Goolsbee is a dove, but even he does not see easing on the near term horizon.

U.S. Fed's Schmid - Focus on inflation side of dual mandate
Paying Article

April 10, 2025 2:09 PM UTC

Fed's Schmid has given a clearly hawkish message.

U.S. Fed's Logan - Must prevent tariff-led inflation becoming persistent
Paying Article

April 10, 2025 1:44 PM UTC

Fed's Logan maintains a cautious approach to policy, with the tariff impact still to be seen.

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Trade Deals with the U.S.: Pressures and Obstacles
Paying Article

April 10, 2025 7:17 AM UTC

Pressures to do trade deals include the weaker U.S. economy and higher inflation when it arrives/foreigners becoming nervous of their USD30trn plus holdings of U.S. securities and more crucially risks to Trump and GOP approval ratings from Republican voters. Obstacles to quick trade deals include Tr

April 09, 2025

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FOMC Minutes from March 19 - Concerns inflation could prove persistent
Paying Article

April 9, 2025 7:13 PM UTC

FOMC minutes from March 19 contained no major surprises, though showed a significant degree of concern over inflation which justifies caution towards easing, with the inflationary concerns led by the prospect of tariffs. Even with Trump’s recent partial climbdown, the risks have probably gone up s

U.S. Fed's Barkin - Watching consumer spending
Paying Article

April 9, 2025 5:14 PM UTC

Fed's Barkin is worried that the cosnumer, previously strong, may pull back.

U.S. Fed's Musalem - Expecting slowdown, not recession
Paying Article

April 9, 2025 3:33 PM UTC

Fed's Musalem is calling for a balanced approach to policy, and like others, stresses inflation expectations.

U.S. Fed's Kashkari - Tariffs make it harder to ease
Paying Article

April 9, 2025 3:15 PM UTC

Despite expecting economic weakness, Fed's Kashkari sees inflationary risks from tariffs as an obstacle to easing.

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U.S China Trade War: Deal or No Deal Prospects?
Paying Article

April 9, 2025 9:00 AM UTC

The prospect of a trade deal between the U.S. and China are less and likely delayed into 2026, due to the hardline stance of Trump 2.0 due to the extra focus on tariff tax revenue and shifting production back to the U.S. It is still our baseline that a deal will be agreed though we would now see a d

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ECB Preview (Apr 17): Deeper Cuts on Trade Tariffs Broadening Impact
Freemium Article

April 9, 2025 8:03 AM UTC

It is surely not a question of whether the ECB cuts rates again at its Apr 17 decision, but what it communicates about policy thereafter.  Not least given the manner in which financial conditions have tightened, the then-notable change in rhetoric last month to suggest the policy stance had become

April 08, 2025

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Bank of Canada Preview for April 16: Easing to pause, but unlikely to be done
Paying Article

April 8, 2025 2:04 PM UTC

The Bank of Canada meets on April 16 and we expect that strength in some recent data and high uncertainty will see rates left unchanged at 2.75%. There will be little forward guidance and the accompanying Monetary Policy Report may avoid providing its usual economic forecasts. We do not expect that

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UK CPI Preview (Apr 16): Inflation to Slip Further Ahead of Likely Key April Surge?
Freemium Article

April 8, 2025 2:03 PM UTC

Not surprisingly, February’s CPI data provided mixed signals, albeit reversing some of the upside surprises seen in January data.  The numbers may have undershot expectations, but actually tallied with our and BoE thinking, at least in terms of a 0.2 ppt drop for both the headline to 2.8% and for

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Reciprocal Tariffs: The Hit To Other Countries
Paying Article

April 8, 2025 9:30 AM UTC

 Overall, we are still assessing the effects on non U.S. countries from the tariffs being imposed by the U.S. via direct trade/business investment/currency and financial & monetary conditions swings.  The impact will be adverse to GDP, but for some major countries could be less than the U.S.  How

April 07, 2025

U.S. Fed's Kugler - Inflation more pressing right now
Paying Article

April 7, 2025 3:50 PM UTC

Financial market turbulence does not appear to have changed the view of Fed Governor Adriana Kugler.

Canada - BoC Q1 Business Outlook Survey shows caution, Consumer Survey more pessimistic
Paying Article

April 7, 2025 2:57 PM UTC

The Bank of Canada’s Q1 business outlook survey is weaker, though probably not by enough to shock the Bank of Canada. The survey was conducted in February, when tariffs were a worry but not yet a reality. 

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U.S. Equities: Hoping for Tariff Negotiations but Fearing Q2 Data
Paying Article

April 7, 2025 9:08 AM UTC

•    The U.S. equity market still remains under pressure from the announcement effect of large reciprocal tariffs, though hopes of trade deals could start to soon produce a stabilization of the market later this week.  Multi month the U.S. equity market outlook depends on whether a recession

April 04, 2025

U.S. Fed's Powell - Waiting for greater clarity, but clearly concerned
Paying Article

April 4, 2025 3:45 PM UTC

Fed's Powell shows concern about the inflationary impact of tariffs, which will imply a cautious approach to easing.

Canada March Employment - Consistent message of weakness
Paying Article

April 4, 2025 1:22 PM UTC

Canada’s March employment with a 32.6k decline is the steepest fall since a brief plunge in the lockdowns of January 2022 and highlights the recessionary risks posed by US tariffs. Unemployment rose to 6.7% from 6.6% while wage growth slowed significantly, to 3.5% from 4.0%.

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UK GDP Preview (Apr 11): Resilience in Spite of Soft(er) Surveys
Freemium Article

April 4, 2025 9:13 AM UTC

UK GDP Preview: Resilience in Spite of Soft(er) Surveys
Despite a fresh downside surprise for January numbers, the odds are increasing that current quarter GDP will be decidedly positive as opposed to the weak(ish) picture we perceive.  This is all the more likely given the 0.1% m/m ‘recovery’ w

April 03, 2025

U.S. Fed's Cook - Hold rates steady for now
Paying Article

April 3, 2025 6:53 PM UTC

Fed's Cook backs the message of Jefferson today and Kugler yesterday. Powell speaks tomorrow.

U.S. Fed's Jefferson - No hurry to adjust rates
Paying Article

April 3, 2025 4:42 PM UTC

Fed's Jefferson is giving a similar message to Kugler yesterday. Powell speaks tomorrow.

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Tariffs: Inflation may be the biggest worry for the U.S.
Paying Article

April 3, 2025 4:12 PM UTC

While surprising the market in their intensity, Trump’s “reciprocal” tariffs were in line with previous threats on most countries, and with Canada and Mexico being treated less harshly that feared, the net surprise is modest to us. However we do feel that inflationary risks have increased furt