Monetary Policy
The Bank of Canada held rates, reinforcing its intention to stay on hold in the near term. The BoC kept rates unchanged for a sixth consecutive meeting, as expected. It also removed references to both cuts and hikes from its press release, reinforcing its…
Australia's June NAB Business Survey points to a cooling economy, reinforcing the case for an extended RBA pause. Business conditions held at +3 for a third consecutive month, while business confidence, the more forward-looking measure, rebounded from -14 to…
Rolling economic surprises support the view that peak Fed hawkishness is behind us. As the last few major reports have shown, including June employment, CPI, and ISM Manufacturing, economic surprises appear to be rolling over. That supports our thesis that…
Indian headline CPI rose to 4.4%, limiting the RBI’s scope to ease and creating a less supportive backdrop for Indian assets. The increase pushed inflation above the RBI’s 4% target, though it remains within the tolerance band. Higher fuel and food prices…
History suggests that the equity impact of rate moves depends heavily on the stock/bond correlation regime, and today’s positive correlation regime leaves the bond market as the main risk to equity multiples.
The June FOMC minutes showed broad agreement on the Fed’s reaction function, but uncertainty over the inflation path. The minutes were the first released under Chairman Warsh’s leadership. The minutes showed broad agreement on the reaction function across…
Subdued Swedish inflation should keep the Riksbank on hold. June headline CPIF eased to 1.3% y/y (0.3% m/m) from 1.5% (0.9%), and CPIF excluding energy slowed to 0.4% y/y (0.6% m/m) from 0.5% (0.7%). Both were marginally above estimates, but disinflation has…
Peak hawkishness is likely behind us, supporting carry trades and risk assets. Despite a hawkish June Fed meeting, Treasury yields have now roughly returned to where they were before Chairman Warsh’s first meeting. The 2-year has tested and rejected new…
Our US Bond strategists expect the Fed to begin shrinking its balance sheet in 2027, but assets will remain well above pre-2008 levels even once that program concludes. Chairman Warsh has launched a task force to review balance sheet policy, and given his…
Mixed labor and inflation data should create a window for the Warsh Fed to keep rates on hold. We recently highlighted an important nuance to the communication changes so far: explicit guidance is removed, yet implicit guidance remains. The Warsh Fed will…