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US stock markets ’ gains in recent months , both in absolute terms and relative to their European peers, owe a lot to their rising valuations. But equities in the US are now arguably quite highly valued, which in our view will contribute to them …
3rd July 2023
The US dollar has continued to tread water against most major currencies this week. With G10 central bankers generally sticking to their hawkish messages at the ECB’s Sintra conference and few major data releases, FX markets seem set to end the week (and …
30th June 2023
Reconciling the slide in Japan’s currency with big flows into its stock market from abroad and a perception that the appeal of foreign bonds to Japanese investors has waned in response to high hedging costs is easier to do once securities transactions …
“Risky” assets are clearly leading “safe” assets as we approach the halfway point of the year. But with recessions looming, we expect souring risk appetite to turn the game on its head in the second half. At the start of this year, many – including …
The Riksbank’s curious communication choices around its foreign exchange reserves earlier today highlight both the challenges depreciating currencies pose to policymakers and the particular vulnerability of the Swedish krona. To recap, the Riksbank hiked …
29th June 2023
Click here to read the full publication. While “riskier” currencies have generally had the best of it over the past couple of months, the dollar has remained rangebound and, in aggregate, is broadly unchanged on the year. With the euro-zone already in …
28th June 2023
We expect the yen ’ s weakness to reverse before long, weighing on the country ’ s stock market. And while the latter might hence hold up a bit better in US - dollar terms, we doubt it will do especially well. Today ’ s gains add to what has been a great …
Latin American equities have, in US dollar terms, fared even better than their US peers so far this year. We think that their outperformance will be interrupted by the global “risk-off” environment we anticipate over the rest of this year, but suspect the …
27th June 2023
Limited fallout from tensions in Russia, for now The Wagner mutiny in Russia this weekend seems to have ended as quickly as it escalated, having had far less impact on global financial and commodity markets than Russia’s invasion of Ukraine last year. …
26th June 2023
The US dollar has rebounded a bit this week on renewed signs that a global slowdown is underway and a growing sense that, like the Fed, most other central banks are also at, or near, the end of their tightening cycles. Although the summer doldrums are …
23rd June 2023
Lower-than-expected euro-zone PMIs in June support our view that economic activity will disappoint, which we think will push the euro and government bond yields down by the end of 2023. Underwhelming PMIs in the euro-zone have put some pressure on the …
A disparate range of global central banks have delivered their latest policy rate verdicts over the past 24 hours. We think there are four key points for investors to note. First, European central banks are clearly still in hawkish moods. But while that …
22nd June 2023
The rapid depreciation of the Swedish krona has pushed the currency down to its lowest ever level against the euro. Worse still, we do not think the krona is significantly below “fair value”, nor do we expect the headwinds facing it to abide anytime soon. …
Yet another upside surprise to UK inflation today has put the spotlight squarely back on Gilts and sterling, both of which have come under pressure ahead of tomorrow’s Bank of England policy announcement. There are four key points to consider for the …
21st June 2023
While the AI revolution has prompted us to revise up our forecasts for US equities today, we don’t think it changes the outlook for US corporate credit spreads much. We think spreads still look too low. Much has been written about the fact that the …
20th June 2023
The greater inversion of yield curves, in response to the prospect of higher-for-longer interest rates, suggests to us the strength of equities won’t last. To re-cap, yield curves have recently tended to become more inverted on both sides of the Atlantic. …
19th June 2023
We think the Bank of England will hike its policy rate by another 25bp, to 4.75%... (Thu.) …while Turkey’s new central bank governor will kickstart a rapid tightening cycle (Thu.) The euro-zone composite PMI probably ticked down in June but remained above …
16th June 2023
The US dollar has fallen for a third week in a row, with the DXY closing in on its weakest level so far this year. But, although it is increasingly challenged by the current “risk-on” environment, we are sticking to the view that the greenback will …
Despite faltering commodity prices and growing concerns around China’s economic rebound, most commodity currencies have held up reasonably well this year. But we continue to think that will change in the second half of 2023 as advanced economies slow …
We expect the BoJ to leave its policy settings unchanged on Friday US consumer confidence may have risen in June, but probably remained weak (15.00 BST) Sign up to our Drop-In to digest next Thursday’s BoE meeting here Key Market Themes While the ECB …
15th June 2023
The Fed is likely to “skip” a hike (Wednesday) ECB policymakers will probably raise their policy rates by 25bp (Thursday) We expect the PBOC to lower its 1-year MLF rate from 2.75% to 2.65% (Thursday) Key Market Themes Investors may be right about the …
14th June 2023
We think UK real GDP rose a bit in April (07.00 BST) Euro-zone industrial production probably edged up in April (10.00 BST) We expect the Fed to leave interest rates unchanged (19.00 BST) Key Market Themes The 10-year Gilt yield has continued to march …
13th June 2023
UK wage growth probably accelerated in April (07.00 BST) We think US core inflation eased to an 18-month low of 5.2% in May… (13.30 BST) … and the headline inflation rate may have fallen to 4.1% (13.30 BST) Key Market Themes Emerging Market (EM) …
12th June 2023
We think US core inflation slowed from 5.5% to 5.2% in May (Tue.) We expect the Fed to leave its policy rate on hold this week, but hike in July (Wed.) ECB will probably deliver another 25bp rate hike but BoJ set to leave policy on hold Key Market Themes …
9th June 2023
The US dollar looks poised to end another week down a touch – the DXY index’s first consecutive weekly fall since April. That probably reflects yield gaps vis-à-vis most other developed markets (DMs) shifting against the greenback as surprise central bank …
We think Peru’s central bank will leave its policy rate on hold (00.00 BST) Inflation in China was probably very low last month… (02.30 BST) … but we think it remained elevated in Norway (07.00 BST) Key Market Themes After sitting out most of this year’s …
8th June 2023
Dismal economic growth has established the Korean won as one of the worst-performing emerging market (EM) currencies against the dollar this year. We expect Korea’s bleak growth prospects and unfavourable yield gaps to keep the won weak, though its …
We expect the RBI to keep interest rates on hold on Thursday (05.30 BST) A revision to euro-zone Q1 GDP could show the bloc in a technical recession (10.00 BST) Sign up for our Drop-In to unpack the major June central bank meetings here Key Market …
7th June 2023
A version of this report was published as an opinion piece in the Financial Times on Wednesday 7 th June Signs that newly re-elected Turkish president Erdogan is willing to move away from unorthodox economic policies has led to an increase in investor …
Australia’s central bank hiked rates on Tuesday while policymakers in Poland stood pat We expect the Bank of Canada to raise its policy rate by 25bp to 4.75% (15.00 BST) Trade data from the US and China likely to show a fall in exports in both countries …
6th June 2023
We expect the RBA to hike by 25bp (05.30 BST) By contrast, Poland’s central bank will probably leave rates on hold Euro-zone retail sales are likely to have stagnated in April (10.00 BST) Key Market Themes OPEC+ ’s decision over the weekend to cut oil …
5th June 2023
After a strong run since mid-May, the US dollar has stalled this week after a run of mixed data and Fed officials striking a cautious tone in recent speeches pushed US interest rate expectations a touch lower. The latest innovation in central bank …
2nd June 2023
We think May’s ISM Services Index remained broadly consistent with stagnant US GDP (Mon.) We expect policy rate hikes of 25bp from Australia’s central bank, to 4.10%... (Tue.) … and from the Bank of Canada, to 4.75%(Thu.) Key Market Themes Despite the …
We think Korea’s inflation fell in May, in line with weaker economic growth (00.00 BST) The US labour market probably loosened further last month (13.30 BST) Watch back today’s Drop-in on the outlook for EM equities on demand here Key Market Themes …
1st June 2023
The US dollar has rebounded in recent weeks as resilient US economic data and renewed hawkish noises from the FOMC have revived the “higher for longer” narrative, shifting relative interest rate expectations back in favour of the US. There is probably …
31st May 2023
House of Representatives to vote on the Fiscal Responsibility Act late on Wednesday Clients can sign up here for three of our Drop-Ins tomorrow… … these will be focused on euro-zone inflation, OPEC+, and the case for EM equities Key Market Themes While …
“Official” China PMIs may show a further slowdown in the reopening rebound (02.30 BST) We expect Thailand’s central bank to hike by 25bp, to 2.00% (08.00 BST) Canada’s rate of growth probably picked up in Q1 (13.30 BST) Key Market Themes A sense that …
30th May 2023
China’s May PMIs are likely to show the momentum from re-opening fading Euro-zone inflation probably fell in May, but we think the core rate was steady (Thu.) We think US non-farm payrolls increased by 200,000 in May (Fri.) Key Market Themes We expect any …
26th May 2023
For the third week running, the dollar looks primed to notch up decent gains against most other major currencies. We don’t think newsflow regarding the US debt ceiling (which has swung from positive to negative and back this week) has had much bearing on …
We think UK retail sales contracted again last month (07.00 BST) US real consumption and durable goods orders probably picked up in April (13.30 BST) Meanwhile, we think US core PCE inflation rose by another 0.3% m/m (13.30 BST) Key Market Themes Higher …
25th May 2023
Despite the recent slowdown in China’s reopening recovery, we don’t expect the renminbi to weaken much further against the US dollar. Yield differentials should begin to tilt back in favour of the renminbi as the Fed turns towards interest rate cuts later …
President Erdogan looks set to secure victory in the second round of Turkey’s presidential election on 28 th May. This Update sets out how we think this would play out in Turkey’s financial markets this year: in short, we think that measures of Turkey’s …
We think Turkey’s central bank will keep its policy rate at 8.5%... (12.00 BST) … while policymakers in South Africa will deliver a 50bp rate hike, to 8.25% (14.00 BST) Clients can sign up here for tomorrow’s Drop-In on China’s economic outlook Key …
24th May 2023
We expect the RBNZ to hike interest rates by 25bp, to 5.50% (03.00 BST) We think UK inflation fell from 10.1% in March to 8.0% in April… (07.00 BST) …and clients can sign up here for tomorrow’s Drop-In on UK inflation (10.00 BST) The “higher for longer” …
23rd May 2023
We think the May euro-zone PMI will suggest growth there slowed a bit… (09.00 BST) …while we think the UK PMI changed little from the previous month (09.30 BST) We expect Hungary’s central bank to leave policy unchanged (13.00 BST) Key Market Themes The …
22nd May 2023
We think China’s Loan Prime Rate will be left unchanged (Mon.) We expect the Reserve Bank of New Zealand to raise its policy rate by 25bp, to 5.50% (Wed.) Real consumption in the US probably rebounded a bit in April (Fri.) Key Market Themes We suspect a …
19th May 2023
The US dollar looks set to end the week stronger against most major currencies amid the prospect of policy rates in developed markets (DM) remaining “higher for longer”. While this week’s rise in DM bond yields was broad-based, short-term yields in the US …
While banking sector strains have become less acute over recent weeks, core money markets remain tense as uncertainty grows around the potential fallout from even a temporary default on US Treasuries. Despite the recent failure of First Republic and …
18th May 2023
We expect Mexico’s central bank to deliver a final 25bp hike, to 11.50% (Thu.) We think inflation in Japan climbed further in May (Fri.) Canada’s retail sales probably fell in March (Fri.) Key Market Themes The S&P 500 has posted solid gains in 2023, but …
We think the Philippines’ central bank will pause its tightening cycle… (08.00 BST) …but expect Egypt’s central bank to hike its policy rate by 200bp A number of US data releases tomorrow may show signs of weakness Key Market Themes We think the recent …
17th May 2023
