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Monetary

What Is Driving The CAD?
The Canadian dollar typically has two main drivers: interest rate differentials and commodity prices, especially oil prices. However, the relationship between the CAD and oil has broken down recently. As our FX strategists have highlighted, the key reason for…
Daily Insights
BoE Needs To Weaken Economy To Kill Inflation
According to BCA Research’s Global Fixed Income Strategy service, a hard landing is the only way to solve the UK inflation problem. Sticky inflation and lingering inflation pressures have made the BoE’s job much more challenging. The UK economy weakened in…
Daily Insights
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Bond Yield Breakout Or Buying Opportunity?

Our latest views on the recent increase in Treasury yields and some key things to watch at next week’s FOMC meeting.

US Bond Strategy by Ryan Swift
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A Hard Landing Is The Only Way To Solve The UK Inflation Problem

The UK labor market remains far too tight to expect wage growth to slow to levels consistent with the Bank of England inflation target. A true recession with rising unemployment is needed to finally slay the UK inflation beast. 2024 rate cuts are off the table, with the central bank having to keep monetary policy tighter for longer than markets expect and the UK economy now rebounding. We recommend downgrading UK gilts to underweight in global bond portfolios, while also looking for opportunities to buy the British pound on pullbacks versus the euro, Canadian dollar and Swedish krona.

Global Fixed Income Strategy, Foreign Exchange Strategy by Robert Timper, Chester Ntonifor
US GDP Disappoints But Details Show Resilience
The advanced estimates for US real GDP suggest that economic growth slowed meaningfully from 3.4% in Q4 2023 to 1.6% in Q1 2024 on an annualized basis, significantly below expectations of 2.5%. That said, the details of the report were less gloomy. While…
Daily Insights
The Dynamics of US New Home Prices
Throughout this cycle, US housing has defied expectations. Overall home prices have never fallen since the pandemic, even as the Fed has conducted its second most aggressive tightening campaign in history. Today, home price growth remains robust, running at…
Daily Insights
Australian Inflation Comes in Hot
Tuesday’s Australian inflation release came in hotter than anticipated. Quarter-on-quarter headline inflation increased from 0.6% in Q4 2023 to 1% in the first quarter of this year, above expectations of 0.8%. Although annual inflation declined from 4.1% to…
Daily Insights
A German Recovery?
Results of Germany’s IFO business climate survey for April sent a positive message on Tuesday. The overall Business Climate Index increased from 87.9 to 89.4, beating expectations of 88.9. Assessments of both the current business situation (increased from…
Daily Insights
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Market Divergences Within Central Europe

The disinflation process is over in Poland and Hungary. Only the Czech Republic will see its core inflation meet its central bank target this year. The reason is much tighter labor market dynamics in the first two. Investors should continue to short a basket of CE3 currencies vis-à-vis the US dollar.

Emerging Markets Strategy by Rajeeb Pramanik
Services PMIs in Europe Surprise to the Upside
Flash estimates for several European PMIs were released Tuesday. The results for manufacturing activity were somewhat disappointing. The German manufacturing PMI increased from 41.9 to 42.2, but underperformed expectations of 42.7. France’s manufacturing…
Daily Insights

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