Monetary Policy
Despite today’s hold, the bar for a rate hike in September remains low and contingent on the next two core CPI reports.
Our Portfolio Construction and FICC strategists argue that allocators should bet on active management, raising exposure to hedge funds and other alternatives. The tailwinds that made beta so rewarding and alpha so difficult after the GFC are now reversing, as…
The Fed held rates at 3.5%-3.75%; despite market jitters, cooling data should keep policy on hold unless labor and inflation reaccelerate. The decision drew three dissents from regional presidents Hammack, Kashkari, and Logan in favor of a 25 bps hike. The…
Our FICC strategists see the yen's collapse and JGB weakness driven by the Bank of Japan's easy policy, not fiscal stress. Japan's exploding debt is not to blame: cross-country evidence shows Japanese yields track savings-investment fundamentals rather than…
The current US macro backdrop does not justify a Fed hike on Wednesday. Along with other tier-1 releases such as the June employment report, CPI, and ISM Manufacturing, consumer confidence has been cooling on easing labor market perceptions. The Middle East…
The JPY’s decline reflects rising inflation expectations rather than fiscal risk, and is likely to persist until the BoJ turns more hawkish. Our Chart Of The Week comes from Mathieu Savary, Chief FICC Strategist. Mathieu examines the JPY’s decoupling from…
The South African Reserve Bank will not be able to hold rates for long. The SARB held its policy rate at 7%, defying expectations for a 25 bps hike. With inflation reaccelerating above the target band, our Emerging Markets strategists believe policymakers…
The ECB held rates at 2.25%, but kept the door open to further tightening in a near-term outlook still heavily shaped by energy prices. The hold was expected, but the ECB also signaled that every meeting remains live due to upside risks to inflation,…
A more aggressive BoJ hiking stance is needed to stabilize the JPY. Recent price action has fueled speculation that Japanese officials now see yen weakness as an inflation risk, and that the BoJ may be open to accelerate the pace of hiking. Verbal…
The Bank of Canada held rates, reinforcing its intention to stay on hold in the near term. The BoC kept rates unchanged for a sixth consecutive meeting, as expected. It also removed references to both cuts and hikes from its press release, reinforcing its…