U.S. April CPI - Little tariff pass-through so far

May 13, 2025 1:02 PM UTC

April CPI is on the low side of expectations at 0.2% both overall and ex food and energy, showing a loss of inflationary momentum since a strong start to the year in January, despite the imposition of tariffs. The core rate was up 0.24% before rounding, with the overall pace 0.22%, so the surprise i

Markets: Less U.S. Recession Risk, But Trade Headwinds

May 13, 2025 9:38 AM UTC

Though we had expected a U.S./China trade truce, the terms are more favorable to U.S. growth than we anticipated.  Combined with the UK framework deal, we have revised down the probability of a U.S. recession from 35% to 20%.  In turn we have revised up the end 2025 and end 2026 S&P500 forecasts t

Preview: Due May 13 - U.S. April CPI - Upside risk after a below trend March

May 12, 2025 12:02 PM UTC

We expect April CPI to increase by 0.3% overall and by 0.4% ex food and energy, the core rate reflecting a rebound from a below trend March as well as some impact from tariffs, though the extent of the tariff impact is highly uncertain. We see the core rate at 0.38% before rounding.

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

Indonesia’s Q1 GDP Disappoints, Deepening Case for Rate Cut

May 8, 2025 8:05 AM UTC

Bottom line: Indonesia’s Q1 GDP growth slipped to 4.87% yr/yr, missing the 5% target as public spending declined. Household consumption edged down and fixed investment declined sharply. Looking ahead, Q2 may bring further softening. 

FOMC Likely to Remain Cautious Unless Economy Falls into Recession

May 7, 2025 7:43 PM UTC

Fed’s Powell made clear that with high uncertainty the Fed is in no position to move rates at this point, though how long that will persist is unclear. We see no reason to adjust our existing Fed call of only one easing in 2025, by 25bps in December, and two more in 2026. This would take the Fed F

FOMC leaves rates unchanged, sees increased risk on both sides of mandate

May 7, 2025 6:15 PM UTC

The FOMC has left rates unchanged at 4.25-4.5% as expected.  The main change in the statement is to note that the risks of higher unemployment and higher inflation have both risen, which gives little insight on any policy bias though suggests that the Fed could be responsive to data going forward.

Preview: Due May 13 - U.S. April CPI - Upside risk after a below trend March

May 6, 2025 3:49 PM UTC

We expect April CPI to increase by 0.3% overall and by 0.4% ex food and energy, the core rate reflecting a rebound from a below trend March as well as some impact from tariffs, though the extent of the tariff impact is highly uncertain. We see the core rate at 0.38% before rounding.

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

Markets: China Truce Hopes and More Data

May 5, 2025 8:05 AM UTC

The direction of travel is towards a U.S./China truce followed by postponing/cancelling most reciprocal tariffs and then trade negotiations. While the markets could cheer this as good news, incoming economic data in May and June is the most critical issue.  We still see the U.S. imposing an average

U.S. April Employment - Suggests economy where Fed wants it, but can it persist?

May 2, 2025 12:57 PM UTC

April’s non-farm payroll with a 177k increase is on the firm side of expectations and shows the labor market remained solid in early April, but the upside surprise is offset by 58k in net downward revisions. Unemployment was unchanged at 4.2% as expected but a below consensus 0.2% rise in average

Preview: Due May 2 - U.S. April Employment (Non-Farm Payrolls) - Few clear signals for labor market weakness

May 1, 2025 12:57 PM UTC

We expect a 145k increase in April’s non-farm payroll, with 135k in the private sector, the latter equal to the Q1 average. Initial claims were showing no signs of labor market weakness in the payroll survey week, with a bounce in the latest week not yet a clear change in trend. We expect unemploy

U.S. Q1 GDP dips, Imports surge goes into inventories and business investment

April 30, 2025 1:07 PM UTC

The 0.3% decline in Q1 GDP is in line with expectations that were downgraded from a marginal increase after yesterday’s sharp rise in March’s advance goods trade deficit. A 3.5% rise in the core PCE price index is stronger than expected. While the Q1 data does not tell us very much about Q2, the

Preview: Due April 30 - U.S. Q1 GDP - A modest decline, but less steep than trade data implies

April 29, 2025 1:24 PM UTC

Q1 US GDP is subject to exceptional uncertainty with calculations based on the components suggesting a significant decline, largely due to a surge in imports. However with non-farm payrolls showing a 0.5% rise in aggregate hours worked a steep fall looks unlikely. We predict a modest GDP decline of

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

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

Preview: Due May 2 - U.S. April Employment (Non-Farm Payrolls) - Few signals for labor market weakness

April 23, 2025 3:31 PM UTC

We expect a 145k increase in April’s non-farm payroll, with 135k in the private sector, the latter equal to the Q1 average, with initial claims showing no signs of labor market weakness. We expect unemployment to correct lower to 4.1% after a March rise to 4.2%, and an in line with trend 0.3% incr

Preview: Due April 30 - U.S. Q1 GDP - A modest decline, but less steep than trade data implies

April 22, 2025 4:32 PM UTC

Q1 US GDP is subject to exceptional uncertainty with calculations based on the components suggesting a significant decline. The Atlanta Fed nowcast shows an annualized fall of 2.2% largely due to a surge in imports. However with non-farm payrolls showing a 0.5% rise in aggregate hours worked such a

China GDP: Good Q1 Start, but 2025 Could Be 4.2% or 3.3%

April 16, 2025 8:24 AM UTC

•    The March data releases from China alongside the Q1 GDP figures show a good start for 2025.  However, underlying domestic demand is soft and Q2 will see a big hit from the U.S. tariffs already introduced.  Our baseline (here) remains for a truce in the coming weeks and a scale back of 1

Indonesia's Strategy to Counter US Tariffs

April 14, 2025 5:06 AM UTC

Facing a potential 32% tariff from the US, Indonesia has launched a multi-pronged strategy to fortify trade relations and ease market access for American giants like Apple and Microsoft. The government plans to lower domestic content requirements and introduce fiscal incentives to attract US investm

Volatile Treasuries But Economic and Foreign Holdings Key

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

U.S. March CPI - Pre-tariff momentum appears lower than was realised

April 10, 2025 1:00 PM UTC

March CPI comes as a pleasant surprise, a 0.1% decline overall led by an expected dip in gasoline, but the 0.1% rise ex food and energy is well below consensus and recent trend and suggests the inflationary pressures entering the trade war are lower than was previously thought. Initial claims, up 4k

Preview: Due April 10 - U.S. March CPI - Gasoline softer, but upside risk on core rate

April 9, 2025 1:46 PM UTC

We expect March to increase by a subdued 0.1% overall but by 0.3% ex food and energy, with the core rate likely to be on the firm side at 0.335% before rounding. This will follow core rates of 0.2% in February and 0.4% in January, both of which were rounded down. Tariffs will hit the CPI with force

Jakarta Under Pressure: U.S. Imposes 32% Tariff on Indonesian Exports

April 7, 2025 7:12 AM UTC

The U.S. has imposed a 32% tariff on Indonesian imports, citing structural trade imbalances, local content rules, and restricted market access for American firms. The move puts pressure on Indonesia’s key export sectors such as footwear, electronics, and apparel. Jakarta has opted for diplomacy ov

U.S. March Employment - A healthy picture, but can it persist?

April 4, 2025 1:01 PM UTC

March’s non-farm payroll with a 228k increase is significantly higher than expected but less so net of 48k in downward revisions. The month looks like a bounce from two months restrained by bad weather, and shows a still strong labor market, though unemployment edged up to 4.2% from 4.1% and avera

Preview: Due April 4 - U.S. March Employment (Non-Farm Payrolls) - Stronger than January and February, but slower than November and December

April 3, 2025 12:01 PM UTC

We expect a 165k increase in March’s non-farm payroll, both overall and in the private sector, to show the labor market remains healthy despite growing downside economic risks. We expect the unemployment rate to slip to 4.0% from 4.1%, and an in line with trend 0.3% increase in average hourly earn

Preview: Due April 10 - U.S. March CPI - Gasoline softer, but upside risk on core rate

April 1, 2025 1:00 PM UTC

We expect March to increase by a subdued 0.1% overall but by 0.3% ex food and energy, with the core rate likely to be on the firm side at 0.335% before rounding. This will follow core rates of 0.2% in February and 0.4% in January, both of which were rounded down. 

March Outlook: Navigating the Turbulence

March 27, 2025 10:30 AM UTC

All chapters of the March Outlook are now available and simply click the link below. 

Charting Our Views: Technical Analysis for Q2 2025

March 26, 2025 10:53 AM UTC

Our latest quarterly technical analysis views on Bonds, Equities, Commodities and FX is now available.  

Outlook Overview: Navigating the Turbulence

March 26, 2025 9:30 AM UTC

·       More tariffs will arrive from the U.S. from April with product (car, pharma, semiconductors and lumber) and reciprocal tariffs. President Trump has a 3-part approach to tariffs to raise (tax) revenue; bring production back to the U.S. and get fairer trade deals.  This means some of t

EMFX Outlook: Divergence versus the USD

March 26, 2025 9:16 AM UTC

EM currencies will be helped by the ongoing USD downtrend against DM currencies, but prospects also depend on relative inflation differentials versus the USD and starting point in terms of valuations.  The Brazilian Real (BRL), Mexican Peso (MXN) and Indonesian Rupiah (IDR) should all make modest s

Equities Outlook: Turbulence Ahead

March 26, 2025 9:05 AM UTC

·       U.S. trade wars will likely hurt U.S. growth and raise inflation, with only small to modest Fed easing and a 10yr budget bill that will likely be neutral to negative for the economy.  With valuations still very high (Figure 1), we see scope for a correction to extend into mid-year th

Asia/Pacific (ex-China/Japan) Outlook: Resilience Through Realignment

March 25, 2025 10:44 AM UTC

·       In 2025, growth across emerging Asia will remain steady but uneven, with investment-driven economies such as India and Malaysia outperforming on the back of infrastructure and industrial policy momentum. While global demand is set to recover modestly, geopolitical friction and tariff

DM Rates Outlook: Policy Divergence

March 25, 2025 9:30 AM UTC

 •    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. 10yr U.S. Treasury yields can be helped by this easing and see a move down through 2025.  However, the budget deficit will likely be 6.5-7.0%

DM FX Outlook: USD under pressure as Trump policies disappoint

March 25, 2025 8:51 AM UTC

·       Bottom Line: The market had expected the Trump presidency to see further fiscal expansion and consequent tight Fed policy and high US yields. But the combination of less tax cuts than previously expected and more aggressive tariff increases have led to reduced expectations for US grow

Preview: Due April 4 - U.S. March Employment (Non-Farm Payrolls) - Stronger than January, but slower than November and December

March 24, 2025 5:39 PM UTC

We expect a 165k increase in March’s non-farm payroll, both overall and in the private sector, to show the labor market remains healthy despite growing downside economic risks. We expect the unemployment rate to slip to 4.0% from 4.1%, and an in line with trend 0.3% increase in average hourly earn

U.S. Outlook: How Much Damage Will a Trade War Do?

March 24, 2025 3:45 PM UTC

•    The U.S. economy, consumer spending in particular, ended 2024 looking healthy, but with inflation still above its 2.0% target if well off its highs. The Trump administration’s more aggressive than expected trade war has made a return to the inflation target more difficult and raised dow

Commodities Outlook: Shifting Dynamics

March 24, 2025 11:00 AM UTC

The oil market faces mixed forces, including geopolitical pressures, demand concerns, and supply shifts. OPEC+ plans production hikes, driven by stricter U.S. sanctions on Iran and Russia and President Trump’s push for more supply. However, global demand prospects, especially in the U.S. and China

Fed: Cautious Policy Due To Uncertainty

March 19, 2025 7:26 PM UTC

The Fed do not appear to be in a hurry to cut interest rates, both as economic momentum remains reasonable and as the Fed waits to see how Trump administration policy feedthrough – especially tariffs to inflation. This suggests that the Fed will need to see a weaker economy and we pencil in one 25

FOMC leaves rates unchanged, dots unchanged but skew more hawkish

March 19, 2025 6:24 PM UTC

The FOMC has left rates unchanged at 4.25-4.5% as expected.  The median dots are unchanged but economic activity forecasts are weaker and the inflation forecast for 2025 is significantly stronger showing concern over the impact of tariffs. The statement notes increased uncertainty and announced a s

China: Mixed Early 2025 Data and Policy Stimulus

March 17, 2025 9:17 AM UTC

Headline industrial production and retail sales were better than expected, but the breakdown of the data shows a mixed picture for consumption and residential investment remains a negative drag on GDP before the 20% U.S. tariffs hits.  Meanwhile, though the weekend policy announcement on boosting d

U.S. February CPI - Renewed progress, but threatened by tariffs

March 12, 2025 12:58 PM UTC

February CPI is softer than expected with gains of 0.2% both overall and ex food and energy, with the ex food and energy rate up by 0.227% before rounding. Coming after a strong January conclusions should be cautious, while upcoming months may be lifted by tariffs. However, the data will come as a r

Preview: Due March 12 - U.S. February CPI - Not as firm as January, but upside risks persist

March 11, 2025 12:10 PM UTC

We expect February’s CPI to increase by 0.3% both overall and ex food and energy, with the gains before rounding being 0.29% overall and 0.32% ex food and energy. The gains will be less strong than in January but a tendency for early year data to be strong is likely to persist. Tariffs on China wi

China: PBOC Slow Cuts with 5% Nominal GDP

March 11, 2025 8:45 AM UTC

•    The PBOC will likely cut slowly and gradually, as China seeks to avoid Yuan depreciation that could worsen the trade war with the U.S.  Additionally, MOF last week forecast nominal GDP of 5%, which with a real GDP target of 5% means that MOF is also forecasting zero inflation.  Close to

U.S. February Employment - Detail mostly on weak side of trend

March 7, 2025 1:54 PM UTC

February’s non-farm payroll with a 131k increase in not far from consensus with near neutral back revisions, but does suggest momentum is slowing in Q1, though probably in part on weather. Other detail is on the soft side, with average hourly earnings up 0.3% with net negative revisions, and the w

Preview: Due March 7 - U.S. February Employment (Non-Farm Payrolls) - Stronger than January, but slower than November and December

March 6, 2025 3:00 PM UTC

We expect a 210k increase in February’s non-farm payroll, with 190k in the private sector, slightly stronger than in January but slower than in November and December. We expect unemployment to remain at 4.0% and a 0.3% rise in average hourly earnings, following an above trend 0.5% in January.

China: Only Moderate Fiscal Stimulus

March 6, 2025 7:55 AM UTC

China announced some fiscal stimulus to help meet the expected 5% GDP target for 2025.  Overall, we have not been surprised by the fiscal stimulus measures announced so far from the March NPC, that have been towards the lower end of expectations.  However, officials on Thursday have hinted that mo

Preview: Due March 12 - U.S. February CPI - Not as firm as January, but upside risks persist

March 4, 2025 5:38 PM UTC

We expect February’s CPI to increase by 0.3% both overall and ex food and energy, with the gains before rounding being 0.29% overall and 0.32% ex food and energy. The gains will be less strong than in January but a tendency for early year data to be strong is likely to persist. Tariffs on China wi

Japan: "Nimble" JGB Intervention, but not now

March 4, 2025 12:00 AM UTC

As JGB yields edged higher on BoJ's further tightening, Japanese officials and BoJ members are voicing their concern over its potential impact. The BoJ has suggested "nimble" response to JGB market volatility after they removed Yield Curve Control last year but we think we will not see any response

Trump Tariffs and U.S. Business and Consumer Sentiment

March 3, 2025 9:02 AM UTC

 •    Mexico and Canada are trying to frantically find solutions to delay across the board tariffs again, though the U.S. is hinting that the rate could be less than 25%.  China extra 10% tariff remains likely, as the U.S. increases trade pressure on China.  More tariffs also remain highly