UK Fiscal Policy and the New Chancellor

July 21, 2026 6:18 AM UTC

·       Apprehension will exist until the Autumn budget, despite a repeated commitment by PM Burnham to stick to the fiscal rules.  Spending commitments are clearer than tax raises measures, while new Chancellor Healey may not be strong enough to curtail spending pressures.  This could mean

The Endpoint Problem: US Asset Prices, Investment and the Current Cycle

July 20, 2026 8:00 AM UTC

·       Asset Price Index (API) framework suggests the US gap is elevated and, on some constructs, has moved into top-decile territory.
·       The question is whether prices, capex and financing conditions are beginning to reinforce the same cyclical risk-accumulation dynamics.
·   

ECB: Bark No Bite

July 17, 2026 7:05 AM UTC

·       The vigilance mantra means that the ECB will still have a broad caution against 2nd round effects and the risks that energy prices could push higher.  We feel that the June inflation data, plus the prospect that Iran/U.S. could call a new truce (here) will be enough to make most on t

Preview: Due July 30 - U.S. June Personal Income and Spending - PCE Prices not quite as soft as CPI

July 16, 2026 4:22 PM UTC

June’s personal income and spending report may be overshadowed by the Q2 GDP report released at the same time. We expect a subdued 0.1% increase in core PCE prices, with overall PCE prices down by 0.1%, leaving gains of 0.3% in both personal income and personal spending looking respectable in real

U.S. June Retail Sales - Underlying resilience persists, Initial Claims fall and Philly Fed surges

July 16, 2026 1:09 PM UTC

The latest US data is on the firm side of expectations. June retail sales are in line with expectations with a 0.2% increase and a gasoline-led 0.2% decline ex autos., but the control group that contributes to GDP maintains underlying strength with a rise of 0.5%. Weekly initial claims at 208k from

FOMC Preview for July 29: Unchanged policy with an unspoken tightening bias

July 15, 2026 3:52 PM UTC

The FOMC meets on July 29 in a meeting that will see no update to the dots or economic forecasts. With forward guidance now becoming limited all meetings should be seen as live, but after softer than expected June non-farm payroll and more importantly CPI data, a change in policy looks unlikely at t

FOMC Preview for July 29: Unchanged policy with an unspoken tightening bias

July 15, 2026 3:49 PM UTC

The FOMC meets on July 29 in a meeting that will see no update to the dots or economic forecasts. With forward guidance now becoming limited all meetings should be seen as live, but after softer than expected June non-farm payroll and more importantly CPI data, a change in policy looks unlikely at t

AI Optimism and Credit Markets?

July 15, 2026 8:05 AM UTC

·       The AI trade in financial markets is also a question of credit markets, given the scale of financing needs is using up hyperscalers free cash flow at a rapid rate and the AI labs heavy financing requirements. Credit markets could become more sensitive, if the AI labs revenue growth sl

FOMC Preview for July 29: Unchanged policy with an unspoken tightening bias

July 14, 2026 5:14 PM UTC

The FOMC meets on July 29 in a meeting that will see no update to the dots or economic forecasts. With forward guidance now becoming limited all meetings should be seen as live, but after softer than expected June non-farm payroll and more importantly CPI data, a change in policy looks unlikely at t

U.S. June CPI - Some volatile moves, but a clear relief for the Fed

July 14, 2026 3:16 PM UTC

June CPI is significantly softer than expected, both on the -0.4% headline and an unchanged outcome ex food and energy, with the respective figures before rounding being -0.422% and -0.017%. While there are a number of volatile declines in the breakdown and recent events in the Middle East present r

U.S. June CPI - Some volatile moves, but a clear relief for the Fed

July 14, 2026 1:12 PM UTC

June CPI is significantly softer than expected, both on the -0.4% headline and an unchanged outcome ex food and energy, with the respective figures before rounding being -0.422% and -0.017%. While there are a number of volatile declines in the breakdown and recent events in the Middle East present r

Iran/U.S.: A New War or Escalating to Deescalate?

July 14, 2026 10:40 AM UTC

·       Our baseline remains that the MOU will hold and that the Strait of Hormuz will reopen.  Iran can be pressured economically by the U.S. naval blockade being re-established. Additionally, President Trump loves to escalate to de-escalate to get a deal.  This is a 60% probability scenar

Mexico: Fiscal Consolidation and Reducing Real Yields

July 13, 2026 9:55 AM UTC

·       10yr real yields in Mexico are currently high at 5%, given a moderate fiscal trajectory and some government action towards fiscal reform (though the judicial reforms have been criticized by global investors, the reality is no major political manipulation).  10yr nominal yields could

China LGFV Repair Rather Than Reboot

July 7, 2026 9:45 AM UTC

•    Our assessment is that this ongoing exercise will likely have a small boost to GDP growth.  LGFV’s debt restructuring could allow some new borrowing, but the big issue is that LGFV and LG finances are dependent on one off property taxes with the building of new property.  The overhang

Australia Outlook: Steady

July 6, 2026 2:45 AM UTC

Australian CPI showed signs of moderation in recent read. It should be enough to persuade the RBA their previous hike to be enough.

EM Government Debt Sinners and Saints

July 3, 2026 1:05 PM UTC

·       Overall, the clearest EM fiscal sinner is Brazil, given its tax revenue/GDP ratio is already very high and requires politically sensitive expenditure cuts after the October election to increase the primary surplus to stabilize the government debt/GDP trajectory and get real bond yield

U.S. June Employment - Upside May surprise offset, but unemployment falls on lower labor force

July 2, 2026 1:20 PM UTC

June’s non-farm payroll is weaker than expected with a 57k increase, 49k private, with downward revisions to April and May. The slowing is consistent with an upturn in the initial and continued claims trends, though both were almost unchanged (-1k to 215k and +2k to 1.814m respectively)  in the l

U.S. June Employment - Upside May surprise offset, but unemployment falls on lower labor force

July 2, 2026 1:12 PM UTC

June’s non-farm payroll is weaker than expected with a 57k increase, 49k private, with downward revisions to April and May. The slowing is consistent with an upturn in the initial and continued claims trends, though both were almost unchanged (-1k to 215k and +2k to 1.814m respectively)  in the l

EZ HICP Review: Absence Second-Round Effects Continues

July 1, 2026 1:42 PM UTC

Contrary to some thinking, EZ HICP inflation continues to behave, both absolutely and relatively – ie to what looks ever excessive ECB price thinking.  The question must be if and when the ECB chooses to note friendlier price and costs signals, rather than pander to the upside prices risks that o

EZ HICP Review: Absence Second-Round Effects Continues

July 1, 2026 10:41 AM UTC

Contrary to some thinking, EZ HICP inflation continues to behave, both absolutely and relatively – ie to what looks ever excessive ECB price thinking.  The question must be if and when the ECB chooses to note friendlier price and costs signals, rather than pander to the upside prices risks that o

AI Boom and Bust?

June 30, 2026 10:45 AM UTC

•    While some are becoming wary that AI bust could arrive in coming quarters, AI labs revenue growth has been explosive and this sustains the vertical chain of datacenter demand and commitments for the hyperscalers and also buoyant semiconductor demand.  For 2027 and 2028 capital markets re

China Yuan to 6.65 Then 6.50?

June 29, 2026 7:10 AM UTC

 ·       We feel that the authorities will pause appreciation at times via FX intervention, but then allow appreciation to restart.  We now see further Yuan appreciation to 6.65 by end 2026, though the authorities will be reluctant to see much more.  For end 2027 we forecast USDCNY at 6.50

ECB Sin(a)tra Preview: Should the ECB Only Consider My Way?

June 26, 2026 1:29 PM UTC

The speed and manner in which the ECB adopted a hawkish stance is response to the Middle East conflict was no surprise; it has many precedents, some of which have led to policy errors which we think may be being repeated at this juncture.  Indeed, despite friendlier price and costs signals, the ECB

Mexico: Banxico Pause, But MXN and USMCA Renegotiations

June 26, 2026 7:04 AM UTC

·       As expected Banxico left the policy rate unchanged at 6.50%, with the focus now on the lagged benefit of easing and also what will happen with the USMCA negotiations.  Banxico will likely keep the current policy rate through end 2026, given concerns that the Fed could tighten – eve

U.S. Personal Income and Spending, GDP, Durable Goods Orders, and Initial Claims - Mostly firm but consumer spending revised lower

June 25, 2026 1:40 PM UTC

The latest US data is mostly strong, with an upward revision to Q1 GDP, stronger than expected May personal income and spending, still firm core PCE prices, lower initial claims and strength in May durable goods orders outside a fall in transport. However the Q1 GDP revision was mixed, with a signif

June Outlook: Iran War and AI Challenges

June 25, 2026 7:55 AM UTC

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

Preview: Due June 25 - U.S. May Personal Income and Spending - Core PCE Prices to outperform CPI, Savings to fall further

June 24, 2026 1:24 PM UTC

We expect May’s core PCE price index to rise by 0.3%, though probably on the low side of 0.3% before rounding, with overall PCE prices up by 0.4%. We expect a 0.6% increase in personal spending to outperform a 0.3% rise in personal income, extending a recent sharp decline in savings.

Outlook Overview: Cyclical and Structural Forces

June 24, 2026 7:00 AM UTC

·       The difference between 2nd round inflation effects from higher energy prices and 1st round effects that central banks can look through swings on whether the Straits of Hormuz will remain open in the coming months after the U.S./Iran interim agreement (here). Despite some tensions, we

China and EM Asia Outlook: Divergent Trends

June 24, 2026 6:22 AM UTC

·       China’s growth momentum is being sustained by AI/tech and green energy production and investment. However, growth is imbalanced with modest consumption growth, due to adverse housing wealth effects and slow wage/job growth.  Overall, we forecast 4.4% for 2026 and 4.2% for 2027. Chi

Charting Our Views: Technical Analysis for Q3 2026

June 23, 2026 9:58 AM UTC

Our latest quarterly Technical Analysis views on Bonds, Equities, Commodities and FX is now available.  

DM Rates Outlook: Tightening or Easing?

June 23, 2026 8:15 AM UTC

·       With the U.S./Iran interim agreement likely to hold and energy prices softening, our projected consumer slowdown will likely tilt the Fed not to hike in H2 2026 and to actually ease by 50bps in 2027, with 25bps moves in both Q2 and Q3.  With 2yr yields consistent with a hike, the tra

DM and EM FX Outlook: Cross-Currents for H2 and 2027

June 23, 2026 8:00 AM UTC

·       Our baseline for the coming quarters is that global FX is moving through a period of dollar bounce and cross-current positioning adjustment, rather than a clean return to the dollar downtrend. The near-term driver is the market's (over) hawkish reading of the June FOMC/Summary of Econ

U.S. Outlook: Consumers Looking Vulnerable

June 22, 2026 2:17 PM UTC

•    The US economy is showing resilience with strength in investment offsetting a gradual slowing in consumption, though consumer spending, which is running well ahead of real disposable income, looks set to slow further. This is likely to see the economy slow in the second half of 2026 even

Equities Outlook: AI Optimism, But Caution Elsewhere in DM economies

June 22, 2026 7:05 AM UTC

·       In terms of the S&P500, we remain less concerned about high valuations in the tech sector provided AI labs growth remains fast.  12mth fwd information technology are mid-range in the 2020-26 experience rather than at the highs. Even so, heavy equity issuance by tech companies and a s

Brazil: Slowing Pace of Cuts and BRL Strength

June 19, 2026 6:55 AM UTC

·       Brazil cut the SELIC by 25bps to 14.25%, but received critiques from the market by raising end 2027 CPI inflation from 3.5% to 3.7% and talking about Q1 2028 in the relevant policy horizon. We feel that BCB still wants to leave the door open to further cuts in 2026, given how restrict

BOE: Gang of 6 and Steady 2026 Rates

June 18, 2026 11:27 AM UTC

 Though Megan Greene joined Huw Pill in calling for a one off 25bps risk management hike, 6 MPC members feel that disinflation is showing through and a soft economy and labor market warrants waiting to see energy prices and potential 2nd round effects. This gang of 6 also feels that markets have ti

FOMC - Policy may prove less hawkish than the dots, assuming slowing in data

June 17, 2026 8:08 PM UTC

The Fed dots show a clearly divided Fed with only a minority on the median rates view for 2026, for a 25bps hike, 2027, which sees a 25bps reversal, and 2027, which sees a further 25bps easing. There are several respondents on either side of the median but we believe the voters lean towards the dovi

U.S. May Retail Sales - Impressive resilience

June 17, 2026 1:01 PM UTC

May retail sales continue to show impressive resilience to downward pressure on real disposable income from rising gasoline prices, with equity strength and lower taxes offsetting to the headwinds, as well as recent resilience in employment, Overall sales rose by 0.9%, with gains of 0.8% ex auto and

BOJ: QT still 5-6% of GDP until 2030 at least!

June 17, 2026 6:25 AM UTC

·       Though the BOJ will maintain bond buying at Yen2trn pm from April 2027, huge redemptions means that net QT will be Yen45trn April 27-March 28 i.e. around 6.5% of GDP after QT at 6% of GDP in 2026.  Then JGB net reduction of Yen40trn (6% of GDP) FY 29 and Yen35trn (5.5% of GDP).  Wit

FOMC Preview for June 17: Dropping the easing bias (update)

June 16, 2026 2:58 PM UTC

The FOMC meets on June 17 and while a change in the Fed Funds target range from the current 3.5-3.75% is unlikely, the statement is likely to drop the easing bias. The median dots are likely to get a little more hawkish with a hawkish skew in the detail, with inflation forecasts, including those for

China: Divided Economy

June 16, 2026 7:22 AM UTC

·       Overall, growth remains unbalanced.  Momentum in AI/automation leads economic growth, with support from net exports still.  However, consumption is not consistent with a 5% growth pace, as adverse wealth effects and a soft labor market mean only modest consumption.  While the stimu

BoJ Review: One Percent

June 16, 2026 4:39 AM UTC

The BoJ hike rates by 25bps to 1% in the June meeting 

U.S./Iran Interim Deal and Reopening Strait of Hormuz

June 15, 2026 12:32 PM UTC

  ·       Our baseline (80%) is that the Strait of Hormuz will reopen in H2 2026 and remains open through 2027.  However, logistics dislocation plus a switch from commercial inventory rundown to rebuilding will likely slow the decline in oil prices back towards normal levels (Figure 1).  O

Asia Country Risk Ratings

June 15, 2026 10:00 AM UTC

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