Economy
The ECB left policy unchanged in September, reiterating a data-dependent stance and signaling no urgency to ease. Markets barely reacted, consistent with a fully discounted decision. The Governing Council appears confident in a soft landing, making a December…
August US CPI was in line with expectations, reinforcing the case for Fed easing and a long-duration stance. Headline CPI rose 0.4% m/m (2.9% y/y), while core held at 0.3% m/m (3.1% y/y). Core goods inflation ticked up to 1.5% y/y from 1.1%, while services…
High US inflation is being driven by tariffs, not domestic inflationary pressure. This argues for Fed easing and a bull-steepening of the Treasury curve.
China’s August inflation data confirm entrenched deflation, reinforcing our overweight in onshore bonds and a tactical long in onshore small- and mid-caps versus large caps ahead of potential stimulus. Producer prices declined 2.9% y/y, easing from…
August PPI inflation cooled, reinforcing the case for Fed easing and long duration with steepeners. Headline PPI fell 0.1% m/m, bringing the annual rate down to 2.6% after July’s 0.7% gain. Core PPI (ex-food, energy, and trade) rose 0.3% m/m (2.8% y/y).…
European sentiment continues to weaken, reinforcing the tactical case for US outperformance over Europe. The September Sentix Investor Confidence index fell to -9.2 from -3.7, defying expectations for an increase and signaling that August’s deterioration is…
Core Europe’s industrial sector will relapse in the coming months due to US tariffs and a strong euro. Investors can play the imminent deflationary shock by being long Central European bonds. They should, however, hedge the currency risk vis-à-vis the euro.
USD-denominated Emerging Market bonds have been outperforming US corporates for the past year. We don’t think the rally is exhausted yet.
The August NFIB survey shows a fragile US economy with disinflationary signals and weak employment, supporting our defensive stance. The Small Business Optimism Index rose to 100.8 from 100.3, a six-month high, though still below December 2024 levels. Much of…
Despite the post-election selloff, investors should continue buying Argentine assets on weakness. Argentine markets sold off sharply after President Milei’s party suffered a crushing defeat in Sunday’s Buenos Aires election. Investors did not expect the…