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Inflation

China: Flirting With Deflation

China is facing a risk of deflation. Marginal interest rate cuts and targeted stimulus will be insufficient to boost China’s growth given the current deflationary mindset and the danger is that the economy may be entering a liquidity trap. Deflation is bullish for government bonds, but negative for equity prices. Chinese share prices will continue to decline.

China Investment Strategy by Arthur Budaghyan
Head Fake Or Real Deal Webcast: Poll Results And Client Questions

Investors are still cautious and have significant cash that needs to be put to work. Trickle-down of it into the US equity market may extend the rally. Overly bearish futures positioning is also a strong contrarian indicator. Disinflation is good for real earnings growth, and imminent earnings rebound may add support for equities.

US Equity Strategy by Irene Tunkel
US Consumer Sentiment: A Durable Rebound?
Preliminary results of the University of Michigan Consumer Sentiment survey sent a positive signal about household morale in June. The Sentiment index rose by a greater-than-anticipated 4.7 points to 63.9 on the back of improvements in both the Current…
Daily Insights
Hawkish ECB: How Much Longer?
As expected, the European Central Bank (ECB) delivered a 25bps rate hike on Thursday, raising the policy rate to 3.5% — the highest since August 2001. Moreover, the central bank maintained a hawkish bias, signaling that further rate hikes are likely in…
Daily Insights
Inflation And Jobs: A Non-Linear Collision Course
According to BCA Research’s Counterpoint service, making inflation imperceptible will require making unemployment perceptible, meaning a recession. Our non-linear world often surprises our linear-thinking minds. For linear thinkers, inflation falling from…
Daily Insights
Will The Fed Hike By Another 50 bps?

This Strategy Insight discusses the bond market and currency implications of the Fed’s “hawkish pause”.

US Bond Strategy, Foreign Exchange Strategy, Global Fixed Income Strategy by Ryan Swift
The Fed Is Nearing Its Destination
As expected, the Fed kept interest rates unchanged on Wednesday in order to give policymakers time to assess the impact of the aggressive tightening cycle. Chair Powell indicated that the decision to pause is consistent with policy getting closer to its…
Daily Insights
Easing US Pipeline Inflation Pressures
The US May PPI report indicates that pipeline inflationary pressures are cooling. Headline PPI inflation fell from 2.3% y/y to 1.1% y/y – below expectations of 1.5% y/y and the lowest since December 2020. PPI for final demand was also lower than anticipated…
Daily Insights
An Inflection Point For Chilean Stocks
The Chilean economy is entering a recession. After two years of tightening fiscal and monetary policies, real economic growth is beginning to contract and inflation is tumbling. Our Emerging Markets strategists expect the economic contraction to deepen in…
Daily Insights
UK Gilts Sell Off Amid Stubborn Inflation
UK gilts have sold off sharply over the past month, particularly at the short end of the yield curve. The two-year yield has risen by over 100bps since mid-May, while 10-year yields have increased by just over 70bps – causing the 2-year/10-year yield curve to…
Daily Insights

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