Inflation/Deflation

The BoE delivered a narrow rate cut to 4%, but a divided vote and fading growth momentum suggest markets are underpricing further easing. Stay overweight UK Gilts. The 5-4 split reflected concerns among dissenters about a stalling disinflation process as…

Banxico’s latest rate cut reinforces our bullish view on Mexican domestic bonds. Mexico’s central bank eased policy by another 25 basis points to 7.75%.  Investors should bet on further easing. Inflation will continue falling within the target range…

India’s central bank held rates at 5.5%, but restrictive policy, weak credit impulse, and rising external risks support further easing and a long bond position. Real lending rates remain near decade highs, and the negative credit impulse already weighs…

The July ISM Services report showed a stagflationary impulse, but soft labor momentum reinforces the view that price pressures remain contained. The headline index fell to 50.1 from 50.8, missing expectations. New orders softened to 50.3, while employment…

While the early resignation of Fed Gov. Kugler opened the door for a politically aligned nominee, yields will ultimately be determined by the economic outlook. Her departure triggered a further intraday DXY drop, as markets reacted to the prospect of a…

Hot July inflation does little to alter Switzerland’s near-term deflationary outlook, as soft data and trade risks support a defensive stance and preference for bonds over equities. CPI ticked up to 0.2% y/y from 0.1%, with core rising to 0.8%, both…

Euro area inflation held steady in July, but near-term risks remain. Long-term investors should buy on dips. Headline and core HICP came in at 2.0% and 2.3% y/y, roughly in line with expectations. The ECB held its deposit rate at 2% at its last meeting…

The July ISM Manufacturing miss shows weakening growth and decelerating inflation, reinforcing our long-duration stance. The index fell to 48.0 from 49.0, with only the production component contributing positively. New orders remain weak, and the drop in…

June US income and spending shows softening demand and rising goods inflation pressure, reinforcing our long-duration stance. Real personal spending only rose 0.1% m/m, in line with expectations. Personal income increased 0.3% m/m, but real income…