FICC

The April CPI report showed clear evidence of the direct effect of higher oil prices on inflation but, so far, limited evidence of passthrough to core.

Improving job growth keeps Fed rate cuts off the table, but evidence of labor market tightening will be required before rate hikes become part of the discussion.

MoF FX intervention has drawn a line at 160, triggering a sharp yen squeeze. But with near-term fundamentals still stacked against the currency, USD/JPY remains poised to retest the highs before any durable turn.

Our Portfolio Allocation Summary for May 2026.

Central banks remain on hold amid heightened uncertainty. We rely on BCA’s Central Bank Monitors to assess the current policy stance of major central banks, and highlight the tactical opportunities across bond markets and currencies.

The UAE’s exit from OPEC is unlikely to impact oil markets in 2026. Over the longer term, however, the emergence of an “anti-OPEC club” of producers favoring unconstrained oil output growth would create a headwind to crude prices and weaken the price floor that OPEC seeks to defend.

So far, there is no evidence of second-round effects from the oil price shock showing up in the US economy. Fed rate hikes are off the table unless those effects emerge.

Special Report

This Special Report argues that Australia and Canada are unloved, undervalued, and on the cusp of a structural re-rating. Long-term investors who wait for the catalysts to become obvious will miss the entry point.

FOMC participants are coalescing around the idea that the funds rate will stay on hold for some time, an outcome that is now well priced in the bond market and that will not materially change under a new Fed Chair.

The BoJ held rates overnight, but the direction of travel hasn’t changed. We discuss how stronger wages, rising inflation, and a weak yen point to further tightening ahead.