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Monetary

July FOMC: Hot Growth, Cold Prices
The July FOMC meeting proceeded pretty much as expected. The Fed hiked by 25 basis points, bringing the target range for the funds rate up to 5.25%-5.50%. The forward rate guidance included in the post-meeting statement was also unchanged from June. It…
Daily Insights
Will Softening Inflation Compel The RBA To Stand Pat?
Australia’s June monthly CPI release shows inflationary pressures continue to moderate. Headline CPI inflation receded to 5.4% y/y -- in line with expectations – following a downwardly revised 5.5% y/y in May. To the extent that the monthly release includes…
Daily Insights
July FOMC Meeting Recap

A brief recap of the July FOMC meeting and its investment implications.

US Bond Strategy, Global Fixed Income Strategy by Ryan Swift
German Business Sentiment Deteriorates
Tuesday’s German IFO survey corroborates the downbeat message from Monday’s flash PMI estimate highlighting weak economic conditions. The headline Business Climate Index dropped 1.3 points to 87.3 in July – its weakest level since November, and below…
Daily Insights
Value Has Returned To Short-Maturity TIPS
According to BCA Research’s US Bond Strategy service, inflation will fall during the next 12 months, but not by as much as markets expect. Investors should take advantage of this valuation opportunity by entering 2-year/10-year TIPS breakeven slope…
Daily Insights
China’s Stimulus: Necessary But Not Sufficient

Stay cautious on Chinese stocks. Equity investors should use any rebound in onshore stock prices to downgrade A-shares from overweight to neutral within global and EM equity portfolios. Remain underweight Chinese investable/offshore stocks. Onshore bond yields will drop to all-time lows. Continue receiving 10-year swap rates. The currency will continue depreciating versus the US dollar in the coming months.

Emerging Markets Strategy, China Investment Strategy by Arthur Budaghyan
No Irrigation-Style Stimulus From Beijing
China’s Politburo meeting delivered a disappointing signal about Beijing’s willingness to deliver meaningful stimulus. Although policymakers pledged support for domestic demand, consumer sentiment, and risk prevention, they underscored that the measures will…
Daily Insights
Weighing The Tradeoffs: Easing Financial Conditions Versus Falling Inflation

This week we preview the July FOMC meeting, provide an update on the Fed’s balance sheet and recommend a new TIPS trade.

US Bond Strategy by Ryan Swift
GFIS Model Bond Portfolio Q2/2023 Review & Outlook: Positioning For Peak Interest Rates

In this report, we present our performance review of the BCA Research Global Fixed Income Strategy (GFIS) model bond portfolio for the Q2/2023, and the outlook and scenario analysis for the next six months. The portfolio return exactly matched that of the benchmark index during the quarter, as modest gains on government bond allocations in the US, UK and core Europe completely offset losses on spread product underweights. Looking ahead, the portfolio is positioned to capitalize on an expected slowing of global growth over the rest of the year through an overweight stance on government bonds versus spread product and above-benchmark duration tilts in the US and core Europe.

Global Fixed Income Strategy
BOJ: Pressure To Tighten?
The Japanese yen slid by 2.1% vis-à-vis the US dollar last week, reversing the prior week’s rally. This latest bout of weakness comes on the back of speculation that the Bank of Japan will keep policy unchanged at its Friday meeting. On the one hand, both…
Daily Insights

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