FICC

We apply a systematic approach to investing based on economic, inflation, and monetary policy surprises to the foreign exchange market. The signals from this framework are broadly consistent with the tactical views of our FX strategists, which anticipate a pause in the USD’s decline and a partial reversal of the recent euro strength.

Special Report

Investors should anticipate above average Treasury returns during the next 12 months, and curve steepeners will continue to profit.

Consensus sees one final ECB cut; we argue two are coming as deflationary forces are building in Europe. Dive in for the trade map: falling Bund yields, tighter peripheral spreads, and a euro primed for a 2026 rebound.

U.S. copper tariffs will redirect the metal’s trade flows from the US to the rest of the world, replenishing depleted inventories abroad. With global copper demand set to soften in H2, the red metal will likely face downward price pressure outside the US. Stay long gold / short LME copper, and initiate an outright LME copper short.

EUR/JPY has reached stretched levels, prompting new short trade recommendations across BCA Strategies. The calls are underpinned by compelling valuation, macro, and technical signals.

Jay Powell won’t be removed as Fed Chair before the expiry of his term next May, but we will learn the identity of his replacement this year, setting up a potentially awkward “shadow Fed Chair” situation.

We discuss the implications of this morning’s CPI report and the relative attractiveness of 2/5 Treasury curve steepeners.

Disinflation continues to unfold globally, and markets are finally catching up. Inflation expectations have broadly realigned with fundamentals, prompting us to shift our global ILB allocation to neutral. While tariff risks are inflating US expectations, pricing in the UK, Japan, and Australia has adjusted sharply. Today’s Strategy Report reviews these developments and updates our country-level ILB positioning.

EUR/USD is in a multi-year bull market. A short-term pause is likely, but the longer-term trend remains higher toward 1.25, and eventually 1.40.

In this chartbook, we look at the balance of payments across DM and EM countries. The US does not fare well, but neither do a few other countries.