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Monetary

Monthly TAA Report: WARNING. Animal Spirits On Premises. Enter At Own Risk

Paradoxically, raging optimism on the US economy is making a reacceleration in growth less likely in 2025. The reaction of the bond market has made the Fed rethink its cutting campaign. Markets are also constraining Trump’s agenda. US manufacturing will not recover with a surging dollar. Fears of inflation and debt sustainability have made moderate House Republicans push back against the President Elect’s wishes. Given the sky-high optimism embedded in asset prices, we believe a defensive portfolio stance is warranted on a 12-month horizon. Overweight gold to hedge the risk of a fiscal crisis.

Global Asset Allocation by Juan Manuel Correa
The Fed In 2025

Our outlook for Fed policy in 2025 discusses our expectations for interest rates, the Fed’s balance sheet and the 2025 strategic review. 

US Bond Strategy by Ryan Swift
UK: Fade Hot CPI
The November UK CPI, in line with estimates, hit an eight-month high, accelerating from 2.3% y/y to 2.6%. Core and services inflation were also strong at 3.5% (vs. 3.3% in October) and 5.0% (flat from October), respectively.  Services inflation…
Daily Insights
2025 Key Views: Five Calls On Global Fixed Income And FX
Our Global Fixed Income and FX strategists published their 2025 outlook, and provide five key views for the year ahead.  Duration revival: After three years of underperformance versus cash, government bonds will outperform in either a soft-landing…
Daily Insights
A Very Hawkish Cut

Our thoughts on this afternoon’s Fed decision and the bond market reaction. 

US Bond Strategy by Ryan Swift
European Sentiment Data Confirms December Softening
European sentiment data was mixed. The December Ifo Business Climate index for Germany missed estimates and was down 1 point to 84.7 from November. The decrease came from its expectations component, which fell to 84.4 from 87.2. Meanwhile, the December ZEW…
Daily Insights
Key Views 2025: The Year Of Change For Europe
Our European Investment Strategy team published their annual outlook, outlining five key themes that will shape Europe’s economy and markets in 2025.  Europe will enter a mild recession in H1 2025, but growth is expected to rebound quickly in the…
Daily Insights
Canada: Low Inflation, Elevated Political Drama
The November Canadian CPI was slightly below estimates, declining to 1.9% y/y from 2.0%, below the BoC’s 2% target but within the 1%-to-3% range. The BoC’s favored core measures, median and trim, were flat at 2.6% and 2.7% respectively after revisions. CPI…
Daily Insights
Key Views 2025: The Year Of Change

For our last publication of the year, we explore five key themes that will dominate the European macro landscape and markets next year. While the start of 2025 will be challenging for European assets, the latter part will offer some much-needed relief.

European Investment Strategy by Mathieu Savary
BoC Back At Neutral
The Bank of Canada cut the overnight rate by 50 bps to 3.25%, a move predicted by economists and roughly priced in. The consecutive supersized cut brings the policy rate in the upper end of the 2.25%-to-3.25% range the BoC considers as neutral. With inflation…
Daily Insights

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