Recession-Hard/Soft Landing
After cutting three times already since June, the Bank of Canada fulfilled market expectations and cut the overnight rate by 50 bps to 3.75%. The BoC sees risks around inflation as roughly balanced over its projection horizon, and is focused on “sticking the…
The Federal Reserve’s Beige Book, its survey of business contacts, shows an economy that has seen little growth since early September. The Fed’s contacts confirmed the manufacturing recession reflected in other data sources. Loan demand was mixed, as…
The US election is tightening in its final weeks, and the latest polls challenge our Geopolitical Strategy’s base case of a Democratic White House. The original thesis was built on the premise of a Democratic incumbent advantage, after only four years in…
Dear client, We are launching a new type of Daily Insight titled “Cross-Asset Focus”, where we delve into the dynamics between multiple asset classes, tying them to the current macro and market regimes. The inaugural entry looks at the dynamics between…
According to the latest estimate of the output gap, the US economy still operates above potential. Continued overheating – a no-landing scenario – would cause a drastic re-pricing across markets which expect a near-perfect soft-landing. The output gap is…
Despite elevated mortgage rates, UK home prices remain resilient. Average new seller asking prices were roughly flat in October, even as evidence of selling pressures are emerging. According to Rightmove, total home prices were up 0.3% in October and…
Since the August selloff in risk assets, the main cross-asset driver was the shift from inflation worries to growth worries. Some of that price action has reversed, as TIPS breakeven inflation rates swiftly rebounded since early September. The 2-year…
Our US Equity Strategy colleagues expect Q3 earnings to be strong enough to fuel the soft-landing narrative. Analysts expect S&P 500 earnings growth to be 4.0% year-over-year, with sales growth of 4.0% too. Yet, with average surprises of 5.6% for…
US housing starts and building permits eased below expectations in September. Permits, a proxy for future construction, dropped 2.9% after rising 4.6% in August. New construction fell 0.5% after rising 7.8% a month prior. These disappointing numbers extend…
Crude prices have been trendless but volatile in 2024. Oil’s choppy price action illustrates the demand and supply tug-o-war in the market. Our bias is for crude prices to weaken on a six-to-nine months horizon. Good economic news such as the resilience of…