Recession-Hard/Soft Landing
The 1mm b/d surge in US crude oil production last year was the result of a flood of low-cost drilled-but-uncompleted (DUCs) shale-oil wells coming online, mostly in 2H23 in the Permian Basin, which our colleagues in BCA's Commodity & Energy Strategy…
The US retail sales release delivered a positive signal about the US economy in December. The 0.6% m/m increase in overall retail sales beat expectations of a more muted acceleration from 0.3% m/m to 0.4% m/m. Importantly, the improvement was broad-based with…
The British pound was the best performing G10 currency on Wednesday as UK gilts sold off meaningfully with the 10-year yield ending the day nearly 19 basis points higher. An unexpected acceleration in CPI inflation in December prompted the move. Notably,…
The New York Fed’s Empire State Survey delivered a somber signal about US manufacturing conditions. The headline general business conditions index plunged from -14.5 to -43.7 in December, disappointing expectations of an improvement to -5.0. This move…
Canadian government bond yields jumped on Tuesday, with the 10-year yield rising by nearly 14 basis points. While most other major DM government bonds also sold off, the move in Canadian yields was relatively more pronounced. Both global and domestic forces…
Results of the ZEW survey sent a slightly positive signal on German investor sentiment. The economic expectations indicator rose to an 11-month high in January – beating consensus estimates of a decline. This increased optimism about the outlook reflects an…
The market will eventually be forced to react to rising odds of a sharp US national policy reversal. Investors should overweight government bonds and defensive equity sectors.
The US manufacturing renaissance, spurred on by reshoring, automation, and government spending, is running its course but progress has slowed on the back of tight monetary conditions and the manufacturing recession. The deceleration of these positive trends weighs on the outlook for the Capital Goods industry group, impeding its performance over the short term. However, we reiterate that positive long-term trends for the industry remain intact. We downgrade Capital Goods to a tactical underweight. It remains a strategic overweight.
According to BCA Research’s European Investment Strategy service, investors should not chase European equities higher from current levels. The soft-landing narrative has captured the minds of investors. The expectations of more disinflation and meaningful…
Canada’s Business Outlook Survey (BOS) indicator increased slightly in Q4, suggesting that sentiment stabilized at the end of 2023. In particular, easing inflationary pressures amid weaker demand and greater competition drove the 0.3-point uptick. Notably,…