Domestic Politics

The UK faces many challenges but secessionism can be contained.

Brazil’s elections have turned into a game of roulette for investors. Bulls and bears were each wrong-footed between the first and second rounds of elections. We are downgrading Brazilian equities, local bonds, and sovereign credit to underweight within their respective EM portfolios.

If President Milei does not ease policy immediately to contain the disinflationary squeeze, he is likely to lose next year's election. This means neoliberal structural reforms will suffer a setback in subsequent years. Close long positions in Argentine assets.

Democratic candidate for the Texas Senate seat, James Talarico, has been leading his opponent, Republican Ken Paxton, for over a month in the betting markets. At the moment, Talarico’s probability of turning the Texas Senate seat blue is a whopping 65%. This is partly a result of Paxton’s flawed candidacy that builds on his dramatically flawed time as Texas’s attorney general. Remember, the staunchly Republican Texas House of Representatives voted to impeach Paxton in 2023!

Forced selling may be approaching a pause, but France’s fiscal and political adjustment has barely begun. Maintain an underweight in OATs and use relief rallies to reduce exposure. Contained contagion is reassuring for Europe; it is not a buy signal for France.

The Supreme Court, Senate, Fed, and other institutions have proved resilient so far under the Trump administration. US institutional erosion is overstated.