European retail sales were stronger-than-expected in March. They grew by 0.7% y/y from an upwardly revised 0.5% contraction in February, upending expectations that they would continue to decline. Improved sales in food…
The cyclical outlook is gloomy for EUR/USD. We subscribe to neither the soft-landing nor the no-landing view and expect a recession to occur in late 2024/early 2025. The pro-cyclical euro would suffer in a global downturn while a…
Mainland residents’ investments in gold, other metals, and Hong Kong-traded stocks are a form of capital outflow. Chinese authorities will counter any excessive capital flight with stricter administrative controls. Thus, markets…
Updated views on US Treasury yields and the dollar following today’s FOMC meeting.
Wild hopes for US rate cuts got shattered, exactly as we predicted. But given the different incentives that the Fed and ECB now face, the relative pricing between the Fed and the ECB could widen further in the coming months. We…
Central banks are in a dilemma whether to prioritize supporting growth or bringing inflation back to target. This is unlikely to end well. Investors should be defensively positioned.
MacroQuant downgraded equities from neutral to underweight on a 1-to-3 month horizon. The model suggests increasing exposure to cash.
EUR/USD has fallen by almost 5% since July last year. There are fundamental reasons why this move has taken place. The US economy has shown significant more resilience than the European one. Consumption continues to be strong,…
The Tokyo inflation release for April came in on the soft side on Friday, with every single metric coming in below expectations. Tokyo headline inflation declined from 2.6% y/y to 1.8% y/y, versus expectations of a much more…
The Canadian dollar typically has two main drivers: interest rate differentials and commodity prices, especially oil prices. However, the relationship between the CAD and oil has broken down recently. As our FX strategists have…