Developed Countries

We maintain our 12-month US recession probability at 60%. However, until the “whites of the recession’s eyes” are more clearly visible, we would refrain from moving to a fully defensive stance.

Economic activity and hiring cooled significantly in the first half of the year. The most important question for investors is whether this signals an imminent increase in labor market slack.

MacroQuant is recommending that equity investors keep their finger near the eject button but avoid pressing it for now. The model is warming up to the dollar again and sees scope for oil prices to rise.

The yen’s discount, surplus, and rising real rates line up for a multi-quarter surge. Find out why EUR/JPY is the first short and when USD/JPY follows.

The Fed will keep rates on hold until the unemployment rate forces its hand.

Investors should anticipate above average Treasury returns during the next 12 months, and curve steepeners will continue to profit.

Jay Powell won’t be removed as Fed Chair before the expiry of his term next May, but we will learn the identity of his replacement this year, setting up a potentially awkward “shadow Fed Chair” situation.