Latest from BCA Research

Special Report

EM credit markets have recently defied the selloffs in EM equities, currencies, local currency bonds, and commodity prices. Such a decoupling is unusual. Resilient US growth and Fed easing are not sufficient to justify very low EM credit spreads.

Bank Credit Analyst

Bank Credit Analyst

In Section I, we explain how recent positive data surprises are connected to expectations of Fed easing, meaning that they are self-limiting. Yields will rise even further if US economic data continue to surprise to the upside, which will put the US back on a recessionary path. A Republican sweep has the potential to be positive for US economic growth over the next year, but trade action under a second Trump presidency will likely be aggressive and economically damaging unless deftly offset by sufficiently large fiscal thrust. In Section II, we explain why the Fed is not politically biased, but has become structurally dovish because of the GFC, its shaken confidence in the “stars”, and its ability to forecast the economy. Over the next year, the Fed may appear to be acting in a politically biased way even if it is merely responding to economic developments. The Fed’s independence could be challenged under a Trump presidency if trade action is not severe.

We update our 12-month return projections for different US fixed income sectors in soft-landing and recession scenarios.

Trump may be favored, but Harris is now underrated. The Senate is highly likely to go Republican – Harris would be gridlocked if she pulled off a victory. If Trump wins it will be a full sweep. Expect volatility in the short term.

ADP's estimate of private payrolls rose by 233K on a seasonally adjusted basis in October, blowing away the consensus estimate of 111K.

We prefer Non-Core Infrastructure and Venture Capital over Buyouts and Multi-Strategy Hedge Funds. We are now overweight Core/+ Real Estate. Investors need to recheck the bank regulation tailwind for their long-term assumptions on Private Credit.

A Trump victory offers a buying opportunity for bonds; a Harris victory offers a selling opportunity for bonds. We explain why.

Special Report

Germany’s economy has lagged that of the rest of Europe for nearly 10 years. So have German stocks. Investors are extrapolating these trends to bet on the country’s deindustrialization. Could Germany manage to beat dismal expectations?

The global political system is destabilizing and the US will turn more hawkish in foreign policy, trade policy, or both, regardless of the election outcome. Tactically go long the dollar.