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June 30, 2025
U.S. and Asia Defense Partners
June 30, 2025 7:30 AM UTC
· Japan, S Korea and Australia could eventually agree to some extra commitment to increase (self) defence spending in the next 5-10 years though perhaps not targets like NATO countries. This could come as part of the trade deal negotiations currently underway. Japan and S Korea
June 27, 2025
U.S. May Personal Income and Spending slip, Core PCE Prices above consensus but not alarming
June 27, 2025 12:59 PM UTC
May’s core PCE price index, while not alarming, is at 0.2% a little firmer than expected, with yr/yr growth rising to 2.7% from an upwardly revised 2.6% (from 2.5%) in April. Personal income and spending data is weak, down by 0.4% and 0.,1% respectively.
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 26, 2025
Preview: Due June 27 - U.S. May Personal Income and Spending - Core PCE Prices to match Core CPI
June 26, 2025 2:25 PM UTC
We expect a 0.1% rise in May’s core PCE price index, matching to core CPI, continuing to show limited tariff pass-through. Subdued data are also likely from personal income, which we expect to be unchanged, and personal spending, where we expect a 0.1% decline. Downward revisions to Q1 income and
June 25, 2025
EM FX Outlook: USD Less in Favor, but EM Mixed
June 25, 2025 8:05 AM UTC
· The Chinese Yuan (CNY) will likely remain stable while trade negotiations with the U.S. continue. We see a trade deal in our baseline (probably Q4) and then a small rise in CNY v USD due to general USD weakness.
· In terms of total returns for the remainder of 2025, th
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
June 24, 2025
Tariffs and the Timing of FOMC Easing
June 24, 2025 6:06 PM UTC
While two Fed Governors. Waller and Bowman, have suggested a July easing could be appropriate, testimony from Chairman Powell suggests a move that early is unlikely, though September is possible if inflation data continues to show a lack of feed through from tariffs. We, and Powell, expect some acce
EZ HICP Preview (Jul 1): Headline Stays Below Target as Services Inflation Rises Back?
June 24, 2025 8:57 AM UTC
Inflation – now below target – is very much a side issue for the ECB at present, albeit with oil prices possibly accentuating Council divides. Indeed, we see the flash June HICP staying at May’s below-consensus, eight-month low and below-target 1.9% (Figure 1). More notably, having jumped
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
DM FX Outlook: USD uncertainty increases as Trump changes the rules
June 24, 2025 7:05 AM UTC
· Bottom Line: After making initial gains after the election, the USD has followed a similar path to the first Trump presidency, falling back steadily this year as optimism on the economy has faded, with the introduction of tariffs contributing to more negative sentiment. Much as in the
June 23, 2025
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
DM Rates Outlook: Yield Curve Steepening?
June 23, 2025 8:30 AM UTC
• We see the U.S. yield curve steepening in the next 6-18 months. 2yr U.S. Treasury yields can step down with cautious Fed easing on a modest/moderate growth slowdown and also if the Fed keeps an easing bias in H2 2026. 10yr U.S. Treasury yields face a tug of war between lower short-dated y
June 20, 2025
U.S. Outlook: Slowdown but not Recession, Cautious Fed Easing
June 20, 2025 2:14 PM UTC
• Policy uncertainty remains high and final details of the tariffs will depend on the decisions of the courts as well as those of President Trump. However the magnitude of the tariffs is becoming easier to predict than the detail. Trump looks set to insist on a minimum average tariff of at
China Outlook: Reasonable but Unbalanced Growth Trade
June 20, 2025 7:30 AM UTC
• China GDP growth remains reasonable though unbalanced. Net exports will take a hit from the trade freeze in April/May, with the impact likely to ease in H2 with the trade truce. We attach a 65% probability to a U.S./China reaching a new trade deal that reduces the minimum overall tari
June 18, 2025
Fed: Hold Then Cautious Easing
June 18, 2025 7:27 PM UTC
Though the SEP reduced growth forecasts and boosted inflation, the guidance from the Fed remains that policy is on hold in the coming meetings. Though the FOMC median still has two 2025 cuts, the breakdown shows that this was a close call and a lot of members see no cut or only 25bps. We look for
June 17, 2025
Preview: Due June 27 - U.S. May Personal Income and Spending - Core PCE Prices to match Core CPI
June 17, 2025 3:02 PM UTC
We expect a 0.1% rise in May’s core PCE price index, matching to core CPI, continuing to show limited tariff pass-through. Subdued data are also likely from personal income, which we expect to be unchanged, and personal spending, where we expect a 0.1% decline.
U.S. May Retail Sales - Two straight declines as confidence slides
June 17, 2025 12:50 PM UTC
May retail sales with a 0.9% decline are slightly weaker than expected. The ex auto data at -0.3% and ex auto and gas at -0.1% are negative too, though the control group which contributes to GDP was resilient with a 0.4% rise.
BOJ QT And Steeper Yield Curve
June 17, 2025 8:41 AM UTC
Despite the slowdown in the pick-up in BOJ QT, monthly bond purchases are set to slow from Yen4.1trn pm to Yen2.1trn pm by Q1 2027. With bond maturities BOJ QT is getting bigger and will mean that supply pressures continue to drive yield curve steepening. We see 1.85% 10yr JGB yields by end 2025
June 16, 2025
China: Retail Sales Reasonable
June 16, 2025 7:25 AM UTC
• Retail sales in May was helped by government trade in programs, but the overall retail sales momentum is reasonable. The industrial production slowdown looks to have been driven by the U.S. tariff chaos in April/May, which has become less adverse after the Geneva trade truce with the U.
BI Likely to Keep Rates Unchanged Amid Global Volatility
June 16, 2025 5:41 AM UTC
Bank Indonesia is expected to hold rates at 5.50% in June after two cuts earlier this year, opting for a pause amid global uncertainty. Subdued inflation and a stable rupiah provide policy space, but the central bank is likely to wait for clearer signals from the Fed. A fresh rate cut remains likely
June 13, 2025
BOE QT: Slowdown in September?
June 13, 2025 8:15 AM UTC
BOE QT is part of the reason behind both a steeper yield curve and subdued M4 and lending growth. The MPC in September will likely accept that to avoid impacting the monetary transmission mechanism that annual rundown of gilts needs to be slowed from GBP100bln pa to GBP75bln. Internal differences
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.
June 12, 2025
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
June 11, 2025
FOMC Preview for June 18: No change in rates or dots, only marginal changes to statement and forecasts
June 11, 2025 4:01 PM UTC
The June 18 FOMC meeting looks highly likely to leave rates unchanged at 4.25-4.5%. We expect only marginal changes to May’s statement and the Fed’s median forecasts from March, with no change at all in the median dots on rates. Chairman Powell at the press conference may welcome recent signal
U.S. May CPI - Little tariff pass-through, with inflationary pressures elsewhere fading
June 11, 2025 12:59 PM UTC
May CPI has surprised significantly to the downside, up only 0.1% both headline and core, with the respective gains before rounding being 0.08% and 0.13%. The data is subdued across the board, with commodities ex food and energy unchanged despite tariffs and services ex energy on the low side of tre
June 10, 2025
ECB: Time to Reassess and Slow QT?
June 10, 2025 2:25 PM UTC
Further ECB easing is on the cards, the question being whether this should start to encompass toning down quantitative tightening (QT) plans too! Notably, the two ppt fall in the discount rate cuts has come against a backdrop where the ECB has continued unconventional tightening by scaling back its
U.S. Deficit and Government Debt Concerns
June 10, 2025 9:00 AM UTC
The large U.S. budget deficit has helped push up 10yr real yields to 2% in 2024/2025, but both the budget deficit (heavy issuance) and government debt trajectories (sustainability and rating concerns) are key going forward if the 10yr budget bill passed is similar to the House Bill. Foreign acco
June 09, 2025
China Disinflation Rather than Deflation
June 9, 2025 7:27 AM UTC
May China CPI remains negative Yr/Yr, but the breakdown is consistent with disinflation rather deflation. Deflation could end up as a drag on the economy, but while growth remains close to the 5% target and CPI is regarded as disinflation rather than deflation, further policy easing will be slow.
June 06, 2025
U.S. May Employment - Resilient picture suggests no urgency for Fed easing
June 6, 2025 1:03 PM UTC
May’s non-farm payroll with a 139k increase, is on the firm side of expectations, particularly after the ADP report, and suggests the economy is not on the cusp of recession yet. Revisions were negative at 95k but leave a stable-looking picture, while average hourly earnings were above trend with
Eurozone: The Tail Wagging the Dog?
June 6, 2025 10:26 AM UTC
Given what now looks to have been an outstanding first quarter, the ECB’s assertion at this month’s Council press conference that it is a good position to navigate the uncertain conditions looks more tenable. After all, GDP jumped 0.6%, twice the previous estimate. But this is no indicator o
June 05, 2025
ECB Council Meeting Review: Easing Window Stays Open
June 5, 2025 1:58 PM UTC
This widely seen 25 bp deposit rate cut (to 2.0%) now means the previous degree of tightening has been effectively halved. Notably, it comes alongside an ECB policy and economic outlook/bias little changed from that of recent months. The door is thus left open for a move at the July 24 policy ve
U.S. April Trade Deficit plunges as Canada's deficit surges, US Q1 Productivity revised lower
June 5, 2025 1:26 PM UTC
April’s deficit of $61.6bn from $138.3bn in March was even narrower than expected. Goods data was consistent with advance data already seen but the services surplus added to the improvement with an unexpected increase. An unexpected downward revision to Q1 non-farm productivity and an upward revis
June 04, 2025
U.S. May ISM Services - Marginally below neutral
June 4, 2025 2:30 PM UTC
May’s ISM services index of 49.9 from 50.8 unexpectedly weakened, moving marginally below neutral for the first time since a far from distant June 2024. This contrasted a rise in the S and P services PMI to an upwardly revised 53.7, from a 52.3 preliminary and 50.8 in April. Most regional service
China Banking Problems
June 4, 2025 8:32 AM UTC
China is suffering a credit demand problem from households overexposed to property and private businesses that are cautious. Meanwhile, the latest IMF banking stress tests shows sections of the banking system remain weak and this is restraining lending. We remain watchful of money and credit tre
June 03, 2025
Nato Summit 5% Target and Trump
June 3, 2025 10:48 AM UTC
Trump’s natural instincts will likely see extra pressure applied on Europe in the coming weeks to commit to 5%, but we do not see existential threats from Trump. In the end, our baseline is that NATO will agree a “soft” aim of 5% (3.5% hard military spending and 1.5% infrastructure/cybersecu
EZ HICP and Labor Market Review: Headline Back Below Target as Services Inflation Reverses Easter Effect
June 3, 2025 9:42 AM UTC
EZ HICP inflation met our below-consensus expectation in dropping to an eight-month low and below-target 1.9% (Figure 1) helped by rounding and a further m/m fall in fuel prices. More notably, having jumped 0.5 ppt to 4.0% in April, very probably due to the impact of the timing of Easter affecting
June 02, 2025
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
May 30, 2025
U.S. April Trade Deficit falls sharply after tariffs imposed, Personal Income strong, Spending and Core PCE Prices subdued
May 30, 2025 1:15 PM UTC
While March personal spending is subdued as expected with a 0.2% rise, personal income shows surprising strength with a rise of 0.8%, while core PCE prices are subdued as expected, up 0.1%, underperforming a 0.2% core CPI. A much smaller than expected advance April trade deficit of $87.6bn is suppor
Tax Foreigners Assets: How To Lose Friends
May 30, 2025 9:12 AM UTC
Increasing taxes on dividends on U.S. equities and corporate bond coupons would alarm foreign investors and hurt the USD and U.S. equities, as it would amplifies foreign investors concerns that they are overweight U.S. assets and the USD. Starting a capital war with investors into the U.S. is
May 29, 2025
Preview: Due May 30 - U.S. April Personal Income and Spending - Core PCE Prices to underperform Core CPI
May 29, 2025 2:23 PM UTC
We expect a 0.1% rise in April’s core PCE price index, even softer than a 0.2% core CPI, though risk of a boost from tariffs persists in the coming months. We expect modest 0.3% gains in personal income and spending, which would imply gains of 0.2% in real terms, still some way off a recessionary
2025 Q1 Country Insights Scores to Download in Excel
May 29, 2025 10:00 AM UTC
The Country Insights Model is a comprehensive quantitative tool for assessing country and sovereign risk by measuring a country’s risk of external and domestic financial shocks and its ability to grow. The access to our full range of scores across 174 countries corresponding to the first quarter o
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