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The last few weeks have been kinder to EM financial markets than the start of August, when equities and currencies slumped as the US-China trade war ramped up again. Even so, neither has performed particularly well, and we think that the stage is set for …
5th September 2019
We expect Chile’s central bank to cut its policy rate by 25bp The US trade deficit is likely to have narrowed in July as exports rebounded … … but Canada’s trade balance probably dropped back into the red (13.30 BST) Key Market Themes Boris Johnson’s …
3rd September 2019
Argentina’s capital controls storing up more trouble for the future UK Parliament will try to block a no-deal Brexit as it returns from its summer recess The US ISM manufacturing index probably rebounded in August (15.00 BST) Key Market Themes Despite the …
2nd September 2019
Activity in China’s manufacturing sector probably improved in August (Monday) Policy rates are likely to be cut in Ukraine, Russia and Chile We estimate that US non-farm payrolls increase by 110,000 last month (Friday) Key Market Themes The Bank of Japan …
30th August 2019
Besides Argentina, EM sovereign debt risks are most acute in the smaller frontier markets. Investors have, rightly in our view, become more concerned about Lebanon’s public finances. And the experience of Argentina suggests that the country’s bond spreads …
We doubt that stocks that reliably pay high dividends will fare better than their peers during the rest of this year, as we think that bond yields are unlikely to fall much further and might even bounce back a bit. Dividend aristocrats are companies that …
29th August 2019
Sterling falls as threat of parliamentary suspension fuels fears of a no-deal Brexit EC Business and Consumer Survey probably fell to a 41-month low in August (10.00 BST) We estimate that the US economy grew by 2% q/q annualised in Q2 (13.30 BST) Key …
28th August 2019
As the global economy slows, we think that expectations for bank earnings will prove too optimistic and that relatively high bank equity valuations in the US, Canada, Australia, and the Nordics are likely to fall. Bank equities have struggled more than …
We think that Germany’s Ifo survey deteriorated further in August (Monday) Euro-zone inflation probably remained subdued in August (Friday) Divergence between US manufacturing sector and real consumption likely to have persisted Key Market Themes Jerome …
23rd August 2019
Yield curves have inverted in most advanced economies over the past couple of weeks, including in the US, Germany and the UK, sparking fears of an imminent global recession. While most advanced economies will just avoid falling in a recession in our view, …
While the Swedish krona and the Norwegian krone are now near the record lows they reached against the euro in 2008-09, we think that monetary policy and rising risk aversion will push them down further. The Swedish and Norwegian currencies have …
21st August 2019
US FOMC minutes might give details about support for further easing (Wed. 19.00 BST) We think that the euro-zone composite PMI and consumer confidence index fell in August Account of last ECB meeting may hint at size of further stimulus (Thurs. 13.30 BST) …
Italian PM Conte has announced his resignation, raising the chance of early elections UK PM Johnson to discuss Brexit backstop with French and German leaders ahead of G7 Minutes from last US FOMC meeting might give indications about future easing (19.00 …
20th August 2019
The PBOC’s may loosen policy again as it launches a new loan prime rate Italy’s government is likely to lose a vote of no confidence on Tuesday Russia’s weak activity data in July probably pave the way for further policy stimulus Key Market Themes Hopes …
19th August 2019
Japan’s exports probably fell at a slower pace in July (Monday) Powell could signal that the Fed will cut rates further at Jackson Hole symposium (Thursday) We think that policymakers will cut rates in Egypt but stand pat in Indonesia (Thursday) Key …
16th August 2019
The Japanese yen has continued to appreciate and is now close to our year-end forecast of ¥105/$. Though the drivers behind its strength may shift, we expect upward pressure on the yen to persist. Since President Trump’s latest escalation of the …
We think that emerging market (EM) currencies will continue to struggle over the rest of 2019 as the global economy remains weak for longer than investors anticipate, the trade war escalates further and political risks, notably in Argentina, remain high. …
15th August 2019
We think that Mexico’s central bank will cut its policy rate to 8.00% (Thursday, 19.00 BST) GDP growth in Malaysia probably slowed a bit in Q2 (Friday, 05.00 BST) US consumer confidence likely to have deteriorated in August (Friday, 15.00 BST) Key Market …
We think that government bonds in Italy will come under pressure again in the coming months, given the brewing political crisis there and the resulting increased uncertainty over the country’s fiscal policy. Last week, Deputy Prime Minister Matteo Salvini …
US retail sales growth is likely to have edged down in July (13.30 BST) We think that US industrial production fell by about 0.1% m/m in July (14.15 BST) Interest rates will probably be left on hold in Norway, but cut in Mexico Key Market Themes After a …
14th August 2019
US administration delays new tariffs on many Chinese imports until 15 th December Germany’s GDP probably contracted in Q2, and euro-zone growth may be revised down We think that UK CPI inflation remained at the BoE’s 2% target in July (09.30 BST) Key …
13th August 2019
Argentina’s financial markets likely to remain under pressure as focus returns to default risk UK unemployment probably fell in June but is unlikely to go much lower (09.30 BST) We think that US headline and core CPI inflation picked up in July (13.30 …
12th August 2019
US core CPI inflation is likely to have held steady at 2.1% (Monday) We think that GDP fell in Germany, and growth was revised down in the euro-zone, in Q2 Euro-zone and US industrial production probably ended Q2 on a weak note Key Market Themes Matteo …
9th August 2019
Government bonds have rallied further in developed economies in recent weeks, fuelling speculation that they are in a bubble which will burst at some point. We disagree. Admittedly, we think that the rally has gone a bit too far. But we doubt that bond …
Japan’s GDP growth is likely to have slowed substantially in Q2 (00.50 BST) We think that China’s CPI inflation continued to rise in July (02.30 BST) The UK economy probably did not grow at all during the last quarter (09.30 BST) Key Market Themes …
8th August 2019
Further weakness in the Chinese renminbi is likely in our view We think that wage growth in Japan rose slightly in June (00.30 BST) The Reserve Bank of Australia will probably leave its policy rate unchanged (02.30 BST) Key Market Themes China ’s decision …
5th August 2019
The profits of Corporate America have shrunk during the past four years according to revised estimates recently published by the US Bureau of Economic Analysis (BEA). By contrast, S&P 500 operating earnings per share (EPS) have grown by nearly 50%. …
Unlike in Australia, interest rates are likely to be cut in New Zealand We think that GDP growth in the UK stagnated in Q2 (Friday) We expect the US ISM non-manufacturing index to have edged higher in July (Friday) Key Market Themes The rally in US …
2nd August 2019
The strong performance of both equities and government bonds this year reflects a view that monetary easing will put the global economy back on track very soon – an outlook that seems too benign to us. Central banks around the world are likely to loosen …
1st August 2019
The recent rally in frontier sovereign dollar bonds is unlikely to be sustained (see Chart 1) and we expect spreads to widen in Argentina, Ukraine and parts of the Middle East. We have raised concerns before about weak balance sheets in Bahrain and Oman. …
30th July 2019
We think that euro-zone core inflation fell in July, and GDP growth slowed in Q2 (10.00 BST) The FOMC will probably cut its target range for the federal funds rate by 25bp (19.00 BST) Brazil’s central bank is also likely to lower its main policy rate at …
We expect the Bank of Japan to extend its forward guidance to summer 2020 or beyond Euro-zone ESI is likely to have fallen to about 102.0 in July (10.00 BST) US personal spending probably rose by about 0.3% in June. (13.30 BST) Key Market Themes The yield …
29th July 2019
The Swiss franc has been the best performing G10 currency over the past three months, despite falling back a bit after the ECB meeting on Thursday. We think that monetary policy as well as safe-haven flows will continue to support it against the euro …
26th July 2019
We think that the ECB will cut rates in September and restart net asset purchases shortly after The central bank of Russia will probably cut its policy rate by 25bp to 7.25% (11.30 BST) US GDP growth probably fell quite sharply in the second quarter …
25th July 2019
Judging by their recent performance, more bad news is priced into German than US equities. As a result, if we are right and risky assets around the world come under pressure as global growth slows further, we suspect that the German stock market will fall …
24th July 2019
Incoming UK Prime Minister Johnson to reveal his Brexit plans in acceptance speech We think that July’s PMIs remained consistent with a sharp slowdown in growth in the US … … and with subdued growth in the euro-zone Key Market Themes There was little …
23rd July 2019
Boris Johnson is likely to win the UK Conservative Party leadership election We expect interest rates to be cut by 50bp in Nigeria, but remain on hold in Hungary Euro-zone consumer confidence probably edged up in June (16.00 BST) Key Market Themes While …
22nd July 2019
We think that Japan’s headline CPI inflation dropped to 0.6% y/y in June (00.30 BST) Canada’s retail sales are likely to have edged up in May (13.30 BST) University of Michigan US consumer confidence index probably rose a bit in July (15.00 BST) Key …
18th July 2019
Emerging market (EM) equities have continued to recover from their sharp falls in May, but we do not think that they are out of the woods this year. Expectations for EM corporate earnings seem to be based on assumptions about the outlook for the global …
17th July 2019
We expect central banks in South Africa, Indonesia and Korea to cut their policy rates Annual growth in Japan’s exports and imports probably remained negative (00.50 BST) The Teranet index is likely to show that Canada’s house price inflation fell further …
While we think that the twists and turns of the UK’s journey out of the European Union will have a bearing on Gilts and sterling, that won’t be the only factor driving them. What’s more, we doubt that Brexit will matter much for UK equities. There are …
UK CPI inflation was probably unchanged at 2.0% y/y last month (09.30 BST) We think that the euro-zone inflation rate for June will be revised upwards (10.00 BST) End of plant shutdowns probably supported Canada’s manufacturing sales in May (13.30 BST) …
16th July 2019
While we are lowering our end-2019 and end-2020 forecasts for the 10-year BTP yield, we remain pessimistic about the near-term prospects for government bonds in Italy. Back in January, when the yield of 10-year Italian government bonds (BTPs) was roughly …
15th July 2019
We think that there is very little, or no, scope for rate expectations and bond yields to renew their downward trend in most economies, given how far they had already tumbled before their recent rebound. The dark blue bars in Chart 1 show how investors …
12th July 2019
Key Market Themes We think that China’s economy lost further momentum in Q2 (Monday) Weather-related disruptions probably weighed on US industrial output in June (Tuesday) Japan’s exports and imports are likely to have fallen in June (Thursday) Since oil …
China’s export and import growth probably remained weak in June Rebound in euro-zone industrial production unlikely to offset fully April’s fall (10.00 BST) US core producer price inflation may have been boosted by the increase in tariffs (13.30 BST) Key …
11th July 2019
Fed minutes from June meeting are likely to take a back seat after Powell’ testimony We think that Sweden’s inflation fell below 2% last month (08.30 BST) US core consumer prices probably picked up in June (13.30 BST) Key Market Themes Today’s strong hint …
10th July 2019
UK MPs to launch fresh bid to stop next PM forcing through a “no-deal” Brexit Japan’s wage growth data continue to be distorted by change in methodology (00.30 BST) Powell could provide clarity on possible July rate cut at the Boston Fed conference Key …
8th July 2019
Fed Chair might provide clarity on rate cut prospects in semi-annual testimony (Wednesday) US inflation may have been boosted in June by the increase in tariffs on Chinese goods We think that euro-zone industrial production edged up in May (Friday) Key …
5th July 2019
Christine Lagarde’s nomination as ECB President makes us even more optimistic about the near-term outlook for government bonds in the euro-zone and reinforces our view that corporate bonds there will hold up better than elsewhere. We have argued for some …
