Monetary
Our DM ex. US strategists see the yen entering a multi-year rally and recommend shorting EUR/JPY now while preparing to short USD/JPY as Fed cuts approach. The yen remains deeply undervalued across PPP, unit labor cost, and real trade-weighted metrics, near…
Economic activity and hiring cooled significantly in the first half of the year. The most important question for investors is whether this signals an imminent increase in labor market slack.
The Central Bank of Brazil (BCB) held rates at 15%, guaranteeing a sharp growth slowdown and reinforcing our underweight stance on Brazilian equities versus EM. All Copom board members voted to maintain an ultra-hawkish policy due to unanchored inflation…
The SARB cut rates by 25 bps to 7.00%; our EM strategists expect further easing and recommends short ZAR exposure. Real interest rates remain elevated, and high borrowing costs are intensifying debt sustainability concerns, with 10-year yields far above…
The Fed will keep rates on hold until the unemployment rate forces its hand.
The BoC held rates at 2.75% for a third consecutive meeting, but a weak growth outlook and contained inflation reinforce our overweight in Canadian bonds. With policy within the 2.25%–3.25% neutral range, the BoC remains comfortable waiting for clarity…
The Fed held rates steady for a fifth straight meeting, with a divided FOMC and resilient growth keeping policy on hold, supporting our long-duration stance. The target range remains at 4.25%–4.50%, with the statement reflecting only a modest downgrade to the…
Tokyo CPI data confirms persistent inflation pressures in Japan, keeping the BoJ on a hawkish footing and reinforcing our underweight in JGBs and bullish stance on the yen. July Tokyo CPI came in broadly in line, falling to 2.9% y/y from 3.1%, with core and…
Investors should anticipate above average Treasury returns during the next 12 months, and curve steepeners will continue to profit.
The ECB held rates steady for the first time in eight meetings, signaling a slower pace of easing while downside risks and entrenched disinflation support positioning for further cuts. The deposit facility rate remains at 2.0%, with the ECB adopting a…