Inflation

Turkey’s disinflation is continuing as tight financial conditions weaken domestic demand, supporting an overweight in local-currency bonds. July CPI eased marginally to 31.8% y/y from 32.1% in June. Elevated policy and lending rates have restrained credit…

The BoJ signaled further hikes, but not the more aggressive tightening needed to stabilize the JPY. The Bank of Japan held rates at 1% as expected in an 8-1 decision, with board member Takata dissenting in favor of a 25 bps hike. The BoJ acknowledged more…

Euro area inflation accelerated in July, but it is too early to conclude that energy pressures are spreading across the broader price basket. Headline HICP rose to 2.9% y/y from 2.8% in June, while core inflation increased to 2.5% from 2.4%. Services…

Australia's softer-than-expected Q2 inflation report reinforces the case for a RBA hold. While trimmed mean CPI, the RBA's preferred underlying measure, edged up to 3.6% y/y from 3.5%, it undershot consensus and the RBA's own forecast. The quarterly rate held…

The current US macro backdrop does not justify a Fed hike on Wednesday. Along with other tier-1 releases such as the June employment report, CPI, and ISM Manufacturing, consumer confidence has been cooling on easing labor market perceptions. The Middle East…

Global pipeline inflation pressures are easing, but inflation-linked bonds remain a cheap hedge against renewed upside risks. Last week’s flash PMIs for July showed price pressures cooling globally. One of our most timely inflation tools is our price pressure…

Our US Bond strategists argue that inflation can settle back at the Fed's 2% goal as expectations ease, even with a persistently tight labor market. Applying the Expectations-Augmented Phillips Curve framework, they weigh two explanations for the pandemic-era…

Our clients expect sticky inflation to persist. Last week’s client poll saw a clear majority expecting inflation to stay sticky near current levels over the next 12 months. The conclusions were similar across clients and social media respondents. The…

The South African Reserve Bank will not be able to hold rates for long. The SARB held its policy rate at 7%, defying expectations for a 25 bps hike. With inflation reaccelerating above the target band, our Emerging Markets strategists believe policymakers…

The ECB held rates at 2.25%, but kept the door open to further tightening in a near-term outlook still heavily shaped by energy prices. The hold was expected, but the ECB also signaled that every meeting remains live due to upside risks to inflation,…