Government

This Strategy Insight presents our view on today’s rate cut by the Bank of England as well as the budget announced by the UK government last week.

Our thoughts on the bond market’s reaction to the election and this afternoon’s FOMC meeting.

Trump’s resounding victory brings a popular mandate that ensures deregulation and higher trade tariffs. Higher budget deficit and immigration reform are also in the cards as the Republicans look like they may squeak a thin margin in the House of Representatives. Foreign policy will become more unilateral, with US assets outperforming initially.

Over the next few months, Japan’s new government will ease fiscal policy, which will improve domestic demand on the margin. Monetary policy may tighten further in the short run but not too much over the long run. The geopolitical setting drives Japan into accommodative economic policy.

The latest Bank of Japan meeting did not alter our high-conviction views of being long the yen and underweight JGBs.

Germany’s economy has lagged that of the rest of Europe for nearly 10 years. So have German stocks. Investors are extrapolating these trends to bet on the country’s deindustrialization. Could Germany manage to beat dismal expectations?

The global political system is destabilizing and the US will turn more hawkish in foreign policy, trade policy, or both, regardless of the election outcome. Tactically go long the dollar.

In this Insight, we evaluate if there is more juice in our macro bet of being long June 2025 CORRA versus SOFR futures, and correspondingly, being short the CAD, for investors with a 1-3 month horizon.