Monetary Policy

The Fed will keep rates on hold until the unemployment rate forces its hand.

The Bank of Canada continues to hold its policy rate amid trade uncertainty and shows little concern about the potential economic damage from tariffs. We judge the risks differently and view a bet on more rate cuts this year as attractive.

Despite macro headwinds, the OBBBA clearly favors Industrials, Financials, and Consumer Discretionary equity sectors. A carefully constructed, factor-aware basket in these sectors is well positioned to outperform in a fiscal-driven, uncertain environment. 

We still believe a recession looms, but it has yet to rear its ugly head. We continue to recommend investors position defensively, but we will change tack if clear signs of a recession don’t emerge soon.

Markets are pricing a return to a neutral policy stance for the major central banks within the next 12 months. However, recession risks still loom amid slowing growth. We unpack where recession risks are underappreciated and what it means for bond positioning.

In this Insight, we highlight our strong conviction trades based on the central bank meetings held by the Bank of England, the Norges Bank, the Swiss National Bank and the Riksbank.  

The Fed’s 2025 interest rate projections reveal two camps within the committee. One group looking for no rate cuts this year and another looking for 50-bps of easing. We think the second group’s forecast will turn out to be more accurate.

In this Insight, we look at the best trade idea from the recent rate cut by the Riksbank. 

In this note, we reaffirm our underweight position in JGBs and long yen positions given the BoJ’s meeting overnight.  

The Bank of Canada may be on hold for now, but deflationary risks are rising fast. Find out why rate cuts may come sooner than markets expect.