FICC

The dollar has had a strong run but its key supports from Fed repricing, positioning, and terms of trade are starting to fade. We close our tactical long USD positions and turn to short USD/JPY, where intervention risk makes yen shorts look increasingly dangerous.

Stay overweight gilts despite renewed political turmoil in the UK.

Special Report

Corporate health remains supportive of tight credit spreads in both the US and Europe, but a growing divide is emerging beneath the surface. Investment-grade issuers continue to strengthen, while lower-rated borrowers face mounting pressures. Credit markets are pricing resilience, leaving investors vulnerable should corporate fundamentals begin to deteriorate.

Special Report

The risk of a “super El Niño” represents a meaningful threat to agricultural markets. Wheat, cocoa, and palm oil appear particularly vulnerable to El Niño-related supply disruptions. A rise in food prices could also generate political — and potentially geopolitical — reverberations across frontier and emerging markets, where food prices are far more relevant than in developed economies.

We react to DM central bank meetings this week and highlight the opportunities emerging across global fixed income and currency markets.

Kevin Warsh announced an ambitious reform agenda for the Federal Reserve. We discuss the potential impact and the current outlook for interest rates.

Special Report

Markets keep buying the dip because liquidity remains plentiful. That buffer lasts through 2026; the bigger question is what happens when it thins in 2027.

Today’s ECB rate hike is not the beginning of a hiking cycle. Growth concerns will soon move to the forefront of ECB policy decisions, preventing further tightening.

The Bank of Canada left rates unchanged and emphasized inflation risks from higher oil prices. We discuss why inflation and labor market data argue against the tightening currently priced.

May CPI data show no evidence of passthrough from energy prices to core inflation. This will keep the Fed on hold for the time being.