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Inflation/Deflation

NY Fed: Near-Term Consumer Inflation Expectations Inch Higher
Results of the New York Fed’s survey show American consumers’ near-term inflation outlook ticked up in September. Respondents’ one-year ahead inflation expectations rose from 3.6% to 3.7%, and the three-year ahead expectations increased from 2.8% to 3.0%.…
Daily Insights
Blowout US Job Gains
The US Nonfarm Payroll report delivered a strong positive surprise about employment growth in September. Job gains accelerated from 187 thousand to 336 thousand – significantly above expectations of a slight decline to 170 thousand. In addition, the increase…
Daily Insights
Easing UK Labor Market Will Alleviate Wage Pressures
The results of the Bank of England’s latest monthly Decision Maker Panel survey reduces pressure on policymakers to tighten further. Business expectations regarding output price inflation over the coming year fell from 5.0% y/y to 4.8% y/y. Similarly, the…
Daily Insights
EU CBAM’s Inflationary Impacts
According to BCA Research’s Commodity & Energy Strategy service, the EU carbon tax – aka Carbon Border Adjustment Mechanism (CBAM) – launched Sunday will lead to higher inflation in the medium term (3-5 years out). If enacted, the CBAM will collect…
Daily Insights
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The EU’s CBAM: The Road to Hell Is Paved With Green Intentions

The EU’s transition to a carbon tax launched this week via its Carbon Border Adjustment Mechanics (CBAM) will lead to higher inflation in the medium term (3 – 5 years out), and will stoke consumer (i.e., voter) antipathy if it becomes effective in 2026. As a result, the tax will be watered down. Food and energy prices are particularly at risk, as imported fertilizers, and electricity-generation and -transmission components made from steel and aluminum are affected by the CBAM. We remain long oil, gas and metals equity exposure via the XOP, XME and COMT ETFs. We also remain long gold to hedge inflation.

Commodity & Energy Strategy
Run A Barbelled Treasury Portfolio
BCA Research’s US Bond Strategy service recommends a barbelled allocation across the Treasury curve. The Treasury curve bear-steepened in September. The 2-year/10-year Treasury slope steepened 32 bps on the month and currently sits at -43 bps. The…
Daily Insights
RBNZ Stands Pat
As expected, the Reserve Bank of New Zealand held the official cash rate at 5.5% on Wednesday, keeping policy unchanged for the third consecutive meeting. The press release underscored that while monetary policy is weighing on economic activity and easing…
Daily Insights
The Signal From The US Inflation Surprise Index
The Citi US Inflation Surprise Index has risen over the past two months after having bottomed at a three-year low in July. The good news is that the level of the index remains negative after having first fallen below zero in April – meaning inflation data is…
Daily Insights
The RBA: A Wait-And-See Strategy
The Australian dollar was among the worst performing major currencies on Tuesday after the Reserve Bank of Australia held the cash rate at 4.1% for the fourth consecutive month. In her post meeting statement, newly appointed Governor Michele Bullock noted…
Daily Insights
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Quarterly Portfolio Outlook: The Vice Tightens Further

Aggressive monetary tightening has always led to recession, although the timing is uncertain. The effects of high interest rates are starting to be felt. Investors should stay risk off and buy government bonds as a safe haven investment with carry.

Global Asset Allocation by Garry Evans

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