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Europe

The Two-Headed Bond Volatility Monster

Is the US in a wage-price inflation spiral that could lead to more aggressive Fed rate hikes? Is it time to buy UK Gilts after a wild month of volatility? We answer "no" to both questions, as we discuss in this week’s report.

Global Fixed Income Strategy
ZEW Suggests Eurozone Manufacturing PMI Has Not Yet Bottomed
The ZEW survey of investor sentiment is signaling that economic conditions in the Eurozone are likely to deteriorate further. The spread between the expectations and current conditions components typically leads trends in the Euro Area manufacturing PMI. It…
Daily Insights
German Bunds Are Massively Oversold
BCA Research’s European Investment Strategy service concludes that the German yield curve will invert and that German 10-year Bunds are a buy. Even though a global recession looms, central banks are unlikely to pause their tightening cycles until inflation…
Daily Insights
EUR/USD Has Decoupled From Interest Rate Differentials
For most of last year and the first half of this year, the market consensus was that the Fed would be among the most hawkish major global central banks. As such, interest rate differentials provided a tailwind for the US dollar over this period. Indeed,…
Daily Insights
The European Yield Curve Will Invert

The ECB will continue to lift rates due to sticky inflation and a tight labor market. Will it be enough to push long-term German yields higher?

European Investment Strategy by Mathieu Savary
Three Warnings From The UK’s ‘Near Death Experience’
According to BCA Research’s Counterpoint service, the UK’s near death experience sends three salutary warnings to all investors. Warning 1: Beware ‘Hidden Leverage’ Hidden leverage is not unique to liability-driven investment (LDI) funds, nor to…
Daily Insights
Markets Vs. Planners: How Will Oil Be Priced?

The G7’s attempt to insert itself in the oil-price-formation process performed by global trading markets will distort markets and the signals driving production, consumption and investment. The G7 will need a face-saving off-ramp to ditch this planner-based proposal. We expect Brent prices to move toward our expectations of $105/bbl in 4Q22 and $118/bbl in 2023, and remain long the XOP ETF.

Commodity & Energy Strategy, Geopolitical Strategy by Matt Gertken, Ashwin Shyam
The UK’s ‘Near Death Experience’ Sends These 3 Warnings

Is the BoE’s emergency intervention in its bond market a British idiosyncrasy that global investors can ignore? No, the UK’s near death experience sends three salutary warnings, with implications for all investors.

Counterpoint by Dhaval Joshi
Eurozone Industrial Production Beats Expectations in August
Eurozone industrial production grew by 1.5% m/m in August – double the expected rate of increase – following a 2.3% contraction in July. The production of capital goods and consumer goods led the August increase. Despite the improvement in industrial…
Daily Insights
Eurozone Investor Morale Continues To Deteriorate
The Sentix measure of Eurozone Investor Confidence sunk 6.5 points in October to -38.3, marking the lowest level since May 2020. Both the Current Climate and Expectations components of the index deteriorated with the latter falling to its lowest since…
Daily Insights

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