Inflation/Deflation
September consumption and income data beat estimates, showing a resilient US consumer but leaving the outlook fragile. Personal spending rose 0.6% m/m, outpacing income at 0.4%, pushing the saving rate down to 4.6%, its lowest level this year. Adjusted for…
Our tactical framework, which tracks the reflexive loop between financial conditions and economic surprises, points to stronger near-term growth, leaving equities vulnerable if inflation re-accelerates. Data surprises move markets, while bond yields and the…
The Riksbank surprised with a 25 bps cut to 1.75%, signaling no further easing for now but keeping the door open to additional cuts as growth weakens. The move came despite recent inflation prints above the central bank’s forecasts. Leading indicators,…
Australian inflation surprised higher in August, validating the RBA’s cautious stance and supporting an underweight on ACGBs. Headline CPI rose to 3.0% y/y from 2.8%, the highest in a year and at the top of the RBA’s 2-3% target range. While the central bank…
This week’s US Bond Strategy Special Report takes a look at the two most provocative papers presented at last month’s Jackson Hole conference.
Low rates volatility has been a key tailwind for equities, but the fragile equilibrium leaves markets exposed to AI sentiment and inflation risks. Rates volatility, measured by the MOVE index, has drifted to multi-year lows and sits below its 20th percentile…
September flash PMIs show slowing global momentum, reinforcing US equity outperformance and underweights in industrial metals. The US composite slipped to 53.6 from 54.6, led by weaker manufacturing. Europe was mixed: Services strengthened modestly but…
Median Fed unemployment rate projections are overly optimistic. The Fed will end up cutting more in 2026 than it currently anticipates.
Canadian inflation stayed contained in August, reinforcing expectations for BoC easing and supporting overweight bonds and CAD steepeners. Headline CPI edged up to 1.9% y/y from 1.7% on gasoline prices, while CPI ex-gasoline slowed to 2.4% and CPI ex-mortgage…
China’s policy-driven constraints prevent the “destruction” part of the creative destruction process. Instead, they entrench overcapacity, deflation, and poor profitability. We are reluctant to chase the rally in Chinese stocks in absolute terms.