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Inflation/Deflation

Navigating By The Stars
The Treasury market’s reaction to Fed Chair Jermone Powell’s Jackson Hole speech was relatively tame on Friday. Although there was some volatility during the speech, the 10-year yield ended the day broadly unchanged. Meanwhile, the 2-year yield rose by 5.5…
Daily Insights
American Consumers’ Inflation Expectations Unexpectedly Tick Up
The final release of the University of Michigan’s gauge of US consumer inflation expectations unexpectedly rose in August. It shows 1-year ahead inflation expectations increased by a tenth of a percentage point to 3.5% (an upwards revision from the…
Daily Insights
Evaluating The Pros & Cons Of Inflation-Linked Bonds

In this report, we assess the best opportunities in inflation-linked bonds in the major developed economies, based on trends in growth, inflation and the stance of monetary policies in each country. We conclude that the environment is turning more challenging for European inflation-linked bond performance versus nominal government bonds, while the opposite is true in Japan. In the US, US TIPS breakevens have likely peaked, particularly at the short end.

Global Fixed Income Strategy
China: A Distressed Property Market
According to BCA Research’s China Investment Strategy service, although property-sector stocks in China’s onshore and offshore markets have been beaten down, they have not yet reached their bottom. The property downturn in China is structural. The…
Daily Insights
In Defense Of The Yuan
Chinese authorities have recently ratcheted up support for the currency. The PBoC continues to set its daily yuan fixing at a stronger-than-expected rate, with the yuan midpoint (a reference for trading that caps the range between +/-2%) at 7.1992 per dollar…
Daily Insights
Biden's Moment Of Truth

Investors should prepare for an equity market pullback this fall, prefer Treasuries over stocks, and US defensives over cyclicals. A pullback could also morph into another bear market given that monetary policy is tight, policy uncertainty will spike, global growth is slowing, and geopolitical risks are still high.

US Political Strategy by Matt Gertken
Dissipating Pipeline Pressures In Germany
German producer prices indicate that inflationary pressures continue to moderate. The producer price index’s 6.0% y/y drop in July is more pronounced than the anticipated 5.1% y/y decline and marks the first annual decrease since November 2020 and the…
Daily Insights
Monitoring The Risk Of A Second Inflation Wave In The US
In an Insight last month, we noted that the Global Investment Strategy service increased its subjective odds for the resurgence of US inflation later this year or early next year from 20% to 30%. Here are some of the data points that they track and that point…
Daily Insights
How Much Higher For German Yields?
According to BCA Research’s European Investment Strategy service, German yields are unlikely to experience a decisive break out that would carry them to 3%. Five economic forces suggest that German yields are unlikely to move meaningfully higher in the…
Daily Insights
How Much Higher For European Yields?

European yields are testing the upper end of their recent trading range. Is the European economic outlook consistent with an imminent breakout?

European Investment Strategy by Mathieu Savary

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