Gov Sovereigns/Treasurys

The consensus soft-landing narrative is wrong. The US will fall into a recession in late 2024 or early 2025. We were tactically bullish on stocks most of last year, turned neutral earlier this year, and are going underweight today. We conservatively expect the S&P 500 to drop to 3750 during the coming recession.

Is the BoE making a mistake moving toward rate cuts before the end of the summer? What would such a move mean for UK asset prices?

We consider the relative merits of four different fixed income investments in the current economic environment: 2-year Treasuries, 10-year Treasuries, Baa-rated corporate bonds and current coupon Agency MBS.

European assets are selling off as investors panic about the upcoming French election. Is this panic justified, and if so, for how long?

Our reaction to this morning’s CPI report and this afternoon’s FOMC meeting.

The ECB is now firmly in easing mode, even if it refuses to pre-commit to a specific rate path. What does this data dependency mean for the euro and European yields?

US Treasury yields bounced after this morning’s employment report. We offer our updated views about how long the recent trading range will hold.

MORENA has once again swept the Mexican election: Claudia Sheinbaum will be president, with little to no constraint in Congress. All in all, Mexican politics will remain stable and overall supportive of markets. In the medium term, fiscal spending will return to conservatism and the constitutional reforms will lead to mixed fiscal and economic repercussions. In the long term, however, fiscal and institutional risks will rise. We advise investors to remain overweight Mexican risk assets relative to EM in cyclical and structural time horizons, but prepare for Mexican markets to sell off in absolute and relative terms in the next couple of months.

Our Portfolio Allocation Summary for June 2024.