Improving eurozone hard data and a stable ECB mean the EUR swap curve should steepen from here. The complexity of estimating Dutch pension reform flows doesn't help the case for a steeper 10s30s. In the US, Treasuries are trading heavily in post-FOMC, and look like they can attempt to continue to do so
Spain’s economy grew by 0.6% over the third quarter, following a robust second quarter, as external demand weakened. With signs of cooling in industrial activity and tourism, growth is expected to normalise over the coming quarters and into 2026
The US remains in a steady state along the coupon curve. But there’s a lot going on in the money markets pipes as repo tightness persists. As we head into the Federal Reserve meeting, the big call would be to maintain the MBS roll-off and replace it with buying of T-bills, while broadly ending quantitative tightening
We expect a 25bp Fed cut today, in line with pricing and consensus. In September, a similar setting from a pricing perspective prompted a sharp dollar rebound. Now, with positioning more balanced and inflation looking better, it’s harder to see the same reaction. We expect some CAD weakness as the Bank of Canada should also cut by 25bp today
To meet surging power demand, the US needs to leverage all sources of energy with a laser focus on efficiency, reliability and affordability, not least if it's going to win the AI race too
US consumer confidence dipped again and remains on par with where we were during the pandemic. Concerns about the potential for tariff-induced price rises, a rapidly cooling jobs market and uncertainties over wealth are all having an influence and point to subdued consumer spending growth over the coming months
Italy's October batch of confidence data marks an improvement in all monitored sectors but services. This is good news for Italian growth perspectives in the fourth quarter
EUR/USD has nudged through resistance at 1.1650 in quiet markets. The softer dollar has been the driver, although we wonder whether some compromise on the French budget is helping too.
The dollar is a little weaker across the board in quiet trading conditions. The yen is outperforming on some very mild verbal intervention from Japanese authorities - but hardly enough to drive a sustainable trend. In a market deprived of US data by the government shutdown, there may be more focus than usual on reports that Amazon plans to cut 30,000 jobs
The oil market continues to digest the potential impact of US sanctions on Russian oil producers. Meanwhile, the risk of sanctions continues to provide a boost to middle distillates
South Korean growth beat expectations amid robust domestic demand, boosted by cash handouts and strong asset markets. Yet a slowdown is expected in the fourth quarter as government support wanes and export challenges abound
A revision of the eurozone's long-term growth outlook would have a significant upward impact on euro swap rates. This is unlikely to happen overnight, but in our view should build gradually over time. In the US, it's a steady state along the coupon curve. But there’s lots going on in the pipes of the money markets as repo tightness persists
Upside inflation risks are receding while worries about the jobs market are mounting. The Federal Reserve is expected to respond with another 25bp interest rate cut on Wednesday, and could also bring QT to a conclusion
The Ifo index increased in October on the back of improving expectations, while the current assessment worsened once again
Global risk assets are bid on the view that this week's Trump-Xi meeting will be a positive one. A 25bp Fed cut on Wednesday should also help the tone, but that is very much priced in. With the People's Bank of China continuing to fix USD/CNY lower, we favour a mild downside bias to the dollar at the start of the week
Bank lending to the eurozone private sector remained unchanged in September; the pace remains modest. This doesn’t provide much direction on monetary transmission, which so far doesn’t seem to be hindered by large macro uncertainty
Positive developments in US-China trade talks over the weekend provided a boost to risk assets, including large parts of the commodities complex
The communiqué following China's Fourth Plenum has given markets a first look at the priorities for the 15th Five-Year Plan. The key focus for policymakers looks little changed, as modernisation, innovation, self-sufficiency, and boosting domestic demand feature prominently
Lingering trade-induced uncertainty continues to weigh on Canadian activity and carries risks of broader jobs market deterioration. We expect the BoC to overlook higher-than-expected jobs and inflation data and cut by 25bp on 29 October. The door may be left open to more easing, and CAD should remain vulnerable against most of the G10
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US sanctions on Russian oil producers triggered a rally in crude. So far, however, that has only erased October’s losses, and it remains unclear whether Russian oil flows will be affected enough to justify structurally higher prices, and, by extension, a stronger USD. So far, the FX impact has been small, partly due to a cautious stance ahead of US CPI
The Dutch central bank acknowledges risks to interest rates linked to the 1 January 2026 transition of Dutch pension funds, but also sees mitigants to prevent market stress. The 10s30s has more room to steepen from a structural perspective, but we don't fully discount the probability of seeing some flattening in January
The Bank of Korea kept its benchmark rate steady at 2.5%, signaling a shift toward a less dovish policy stance. For the second consecutive meeting, one member dissented, while a growing number prioritised financial market stability over economic growth
Oil prices are trading firmer this morning after the Trump administration imposed sanctions on Russian oil producers Rosneft and Lukoila
Although September retail sales growth fell short of expectations due to weak food sales, the sector still performed strongly thanks to robust durable goods demand. When combined with solid industrial production and construction data, along with anticipated strength in services, this supports our projection of 4%YoY growth for 3Q25
Both food and services inflation are undershooting the Bank of England's forecasts, and together with softer wage growth, that brings another 2025 rate cut firmly back into play. Everything now depends on the details of the November Autumn Budget
Next week’s ECB meeting is unlikely to leave a lasting impact. The December meeting is the one to watch as chances of a rate cut are still higher than markets currently anticipate
Japanese exports recovered mostly in line with market expectations. We cautiously expect US-bound exports to stabilise after the recent trade deal. Stronger-than-expected imports indicate continued investment in AI and semiconductors, supporting growth in the fourth quarter
LME Week, the biggest gathering of the metals industry, brought a cautiously upbeat tone to metals markets this year. While macro uncertainty, particularly around China-US trade negotiations, continues to cloud near-term demand, participants broadly see a turning point as physical tightness and supply disruptions come into focus
Spot gold prices sold off aggressively yesterday as participants took profits in a market that has been extremely overbought
The current risks are towards more ECB easing, but because medium-term risks are tilted to the upside, we think markets will remain firmly anchored around a 1.75% landing zone. In the US, the ultra front end has a tight feel to it, while longer tenor yields have a more loose tendency. We identify some technical factors driving this
This year's Autumn Budget could be seismic for UK markets. We think it's more likely to push gilt yields down than up, yet there are several ways – from fiscal rule changes to dubious austerity pledges – which could cause borrowing costs to spike
Concerns about the US credit market have eased further since the weekend, prompting a hawkish repricing in the Fed curve and justifying a stronger dollar. EUR/USD may slip all the way to 1.160 in the next few days, but it may require a hot US CPI print to extend the drop. Elsewhere, Japan’s new PM Takaichi was confirmed by parliament this morning
Looking for lower market rates is the simplest interpretation of the wider backdrop. However, an upward creep in US inflation and a slow firming of Eurozone purchasing managers’ indexes argue against. Something would need to break for this narrative to change
Poland's industrial output surprised positively in September, but the outlook is uncertain as some auto producers plan plant closures and production pauses by the end of 2025. Wage growth in services is easing; employment is falling amid labour shortages. Policymakers may await more data before resuming rate cuts in 2026
Our economics team expects Wednesday's UK services inflation to undershoot the BoE's projection with a 4.6% read, which is also below the 4.8% consensus. That can modestly move the needle to the dovish side in the GBP swap curve and weigh on the pound this week.
The eurozone calendar is empty until Friday’s PMI and EUR/USD moves will primarily depend on market sentiment about the US credit market. What is important to note is that EUR/USD is spot on its short-term fair value (1.167) despite the recent rally.
As Jamie Dimon warned, there may be more ‘cockroaches’ (i.e. distressed lenders) out there after two US regional banks reported credit issues last week. Markets will be looking very closely for evidence of that, and the dollar continues to face substantial downside risks. Later this week, US CPI should not come in hot enough to derail Fed easing plans
Chinese GDP slowed by less than expected in the third quarter amid the boost from external demand. With China on track to hit this year's growth target, we could see less policy urgency. But weak confidence translating to soft consumption, investment, and a worsening property price downturn still need to be addressed
Pricing in Czech production points to strength in domestic sectors such as services and construction, while declining prices in industry indicate that underlying fragility persists. We see potential underperformance of the eurozone as the sword of Damocles for Czech exporters. The Czech National Bank will live in a double-faceted world for some time
Expect political fragmentation to continue in the Netherlands as a government with less than four parties seems unlikely. While coming from a comfortable position in terms of economic growth and public finances, political indecision risks undermining the Netherlands’ favourable medium-term outlook
Renewable power projects have a duty to support the nature around them, but how they’re designed is crucial. Gerben Hieminga looks at how solar and wind projects can benefit biodiversity and argues that regulation, not market forces, is key to aligning climate, nature, and financial goals
Global bond yields are pushing lower amidst a broader flight to safety, with Gilts leading the way. Even now, Gilt yields still seem high, driven by a hawkish Bank of England and a material risk premium. Gilt swap spreads were more sensitive to French turmoil than to dynamics in US Treasuries or Bunds, but this should change with more budget certainty
Gold and silver hit another record high this morning, topping the all-time peak set just yesterday
A sudden surge in scrutiny of US regional banks is hitting equities and the dollar, which, incidentally, faces the negative drag of a dovish Fed repricing, some hopes for a Ukraine truce, falling oil prices, and ongoing US-China trade tensions. It’s hard to pick a bottom in the ongoing USD sell-off, which may well run a bit further from her
China's discussion of its 15th Five-Year Plan will be a major focus, along with GDP and property price data and a loan-prime-rate decision. The Bank of Korea is expected to leave rates unchanged, while markets will get key data from Japan and Taiwan
Latam FX continues to perform well, buoyed by high yields and some firmer prices for key exports. While we are not expecting major setbacks here, we're not looking for major advances either. Here it looks like Brazil is testing the waters on fiscal policy ahead of next year's election and the Mexican peso could still be derailed by USMCA renegotiation
Some of the best performing currencies in the CEE region have started to hand back some of their gains as markets question whether central banks will have to turn more dovish. That's particularly been the case in Hungary. However, our call is that rate cuts are delayed, and the forint can continue to enjoy carry trade interest. CZK and ZAR should also do well
The dollar is trading towards the top of its trading range, buoyed by the lack of US data and some challenges faced by the euro and the yen. Yet US consumers remain fearful of their employment prospects, and we doubt the Fed will stray from its path toward two more rate cuts this year. Lower US hedging costs and seasonal trends suggest recent $ strength won't last
Depriving investors of US macro data, the government shutdown has brought a reprieve to the dollar. Bears have become discouraged by the lack of soft jobs evidence, and many have thrown in the towel.
The dollar revealed its vulnerability during Friday afternoon’s FX trading. The fear remains that this year's hike in US tariffs will eventually show up in hard data and once again challenge the idea of US exceptionalism. In the ongoing absence of US data, this week will be dominated by central bankers at the IMF meetings and international politics
Price pressures remained at a constant 9.9% in September, with seasonal food items offering mild relief. Services inflation continues to show resilience, and wage growth dipping below 5.0% adds further drag on demand. Our year-end projections remain 9.6% for 2025 and 4.5% for 2026
China's exports continued to beat forecasts in September, but the bigger surprise was the surge of imports to hit a 17-month high. This resilience shows that China has strengthened trade with the rest of the world amid US protectionisma
Czech headline inflation eased in September due to subdued food prices. Yet annual price growth in services and rising rents continue to pose a risk of entrenching inflation expectations given the economic upswing. That said, worrying news from the main eurozone trading partners threatens to dampen the growth outlook
August’s Italian production numbers suggest that a hoped-for timid improvement in the third quarter has not materialised. While some caveats should apply when dealing with summertime data, it would seem the onus now lies with a growth in services
Switzerland’s economy is under significant pressure due to the imposition of US tariffs on Swiss exports. As such, we have revised down our GDP growth forecasts
Markets are quite clearly rethinking popular short-USD trades, but further gains may prove harder to sustain unless markets start to price out Fed easing. With the US CPI report reportedly being published next week, we actually see a good chance an October cut will be greenlighted. Today, keep an eye on more French news and Canada’s jobs numbers
Seemingly defying a backdrop of high uncertainty even by the ECB’s own accounts, volatility in markets continues to decline. On the surface, it may look like complacency. But a perceived limited upside in rates, and a potentially bigger downside if they were to actually start falling, also gives spreads their backing
The tone of NBP President Adam Glapinski’s press conference suggested openness to another interest rate cut in November. The new inflation projection, and macroeconomic data published before the November Council meeting will be important in shaping this decision. We assess the probability of another cut in November to be well above 50%
We have revised our gold forecast higher. Again
We are increasingly confident that around €600bn of assets will transition on 1 January 2026, bringing about significant flows in longer-dated bonds and swaps. Markets are closely watching, with 10s30s steepening on headlines. Credit should benefit from the transition, with most flow funds only coming in in after 1 Januarya
In a dovish turn, the Philippines’ central Bank, the BSP, has cut rates by 25bp to 4.75%, citing softening growth and subdued inflation. Infrastructure spending concerns and corruption scandals add downside risks to our 2026 GDP outlook. The chances of a final 25bp rate cut in December have increased meaningfully
After years of unchecked budgetary slippage, Belgium’s federal government is now attempting to launch its most ambitious fiscal consolidation effort since the 1990s. The signal is clear: it’s time for action. Yet, despite the urgency, a rapid stabilisation of the debt ratio remains unlikely
Taiwan's export growth has been rather dependent on demand from the US. Fortunately, the tariff hikes in August do not appear to be having a significant impact on Taiwan's exports to the US, at least not yet
The just-released minutes of the ECB’s September meeting show a unanimous decision to keep interest rates on hold, viewing this approach as the most appropriate response to ongoing elevated uncertainty
The oil market came under some pressure this morning after reports of a potential breakthrough on the Middle East peace deal. Higher oil inventory in the US further added to the pressure on oil prices
Recent headlines from France offer cautious optimism, with markets showing unexpected resilience despite domestic turmoil and broader uncertainties like the US shutdown. In European bonds, recouping the foreign investor shares after QE is not yet complete, although it can be a source of volatility
Unlike Europe, the US benefits from software and tech companies that generate billions of operating cash flow, which is used to fund the AI investment boom. Therefore, we expect borrowing in Europe to be only opportunistic. Since these firms are not taking on much new debt, the risk of overcapacity is unlikely to affect their creditors
Foreign tech companies have issued more euro-denominated debt than expected so far in 2025, driven by attractive funding costs in euro markets. This points to European strength. Our expectations for 2025 debt issuance were initially lower as US tech firms can fund their heavy capital expenditure programme from cash flows
Hungary's September inflation numbers came in flat as expected, but we don't take long-term comfort in that. Price pressures are still far from the central bank’s target. Looking ahead, there is some light at the end of the tunnel. A warning, though: it could be a train
Retail sales added 3.5% annually when adjusted for price effects, coming in above market expectations. Households have enough resources from solid wage growth in the first half of the year. Nonetheless, sentiment will be the key when looking ahead, as the external environment becomes wobblier
The US electric vehicle market is set to see a correction following the end of federal subsidies. The policy turnaround delays the uptake – but ultimately, we don't think it will change the future or the long-term direction of travel
Spot gold extended its rally to top $4,000/oz for the first time this morning, as concerns over the US economy and a government shutdown boost demand for safe havens
We doubt markets expect the French prime minister to find a solution by Macron's imposed deadline. With little else to work with, supply pressures might be leading on Wednesday. Overall, euro rates seem well-positioned for now, but over the long term, we see the 10Y swap rate settling at a higher level
Extremely disappointing industrial data in August has just increased the risk of yet another quarter of contraction for the German econom
The oil market opened higher in the early trading session today following a modest output hike from OPEC+ for November 2025. Meanwhile, gold continued its rally to new record highs amid the prolonged US shutdown
The CIS region remains resilient amid global uncertainty, with growth outperforming expectations despite persistent inflation and external pressures. Fundamental improvements and ratings upgrades are supportive of sovereign credit in the region, while we expect further steady issuance
Unprocessed food was mainly responsible for Czech headline inflation ticking lower. Meanwhile, pricing in services remains robust, and may affect inflation expectations. One softer-than-expected inflation print is unlikely to alter the central bank's hawkish stance. We'd need to see more relaxed core inflation and disinflation in services first
Eurozone retail sales declined by 0.1% in August compared to July. This sales trend has been roughly flat since April. The worried eurozone consumer is seemingly shying away from the shopping street despite improvements in purchasing power across the bloc
Romanian consumers have recently hit the brakes, signalling increased caution. While some of the August slowdown can be attributed to pre-emptive spending ahead of tax hikes, that doesn’t fully explain the drop. We do not expect this steep decline to become the norm, but caution is likely to persist into year-end and early 2026
Despite inflation nearing double digits and real rates staying negative, the National Bank of Romania (NBR) is expected to maintain its cautious stance at its 8 October meeting, prioritising stability amid weakening consumption and uncertain growth prospects
We expect the Reserve Bank of New Zealand to cut rates by 25bp on 8 October, in line with consensus and pricing. Markets are betting on two more cuts after October, which looks a bit premature having not yet seen third-quarter CPI data. Dovish bets suggest downside risks for NZD are reduced into year-end
Unemployment remains near all-time lows as the economy maintains a slow pace of growth amid significant uncertainty. So, despite a small uptick in the unemployment rate, the labour market mainly shows resilience
GenAI use is ramping up fast, offering insights into how people engage with it. OpenAI recently published a deep dive into ChatGPT usage. The findings show that while users apply it to boost productivity, usage patterns vary across demographics – raising questions about who benefits the most from this technology
US rates are finding bullish signals in second-tier data as the US government shutdown continues. The second-largest Dutch pension fund is showing confidence about its transition date of 1 January 2026, which should help support the 10s30s steepening. Approval from the regulator, however, has not been explicitly communicated yet
Last week's US data was in general good, but today's sentiment and labour data remind us that not everyone is feeling so positive. This is a constraint on US growth prospects and suggests the Fed will retain an easing bias through the rest of the year
The RBI has held its repo rate steady at 5.5% as it balances growth and currency risks. It has sharply cut its inflation forecast, but it's cautious about INR weakness. A rate cut in December is a distinct possibility, especially if India can’t improve tariff terms with the US
The pickup in inflation to 2.2% in September was mainly due to energy effects, which will fade in the months ahead. A small undershooting of the inflation target actually seems realistic around the turn of the year. Expect the ECB to hold rates steady for now
Headline inflation in the Netherlands surged well above expectations in September. Although a swift return to a more normal pace wasn’t anticipated, today’s data illustrates just how persistent price pressures can be
US markets turned slightly bullish into quarter-end – and the government shutdown. As a result, key directional cues from official data around jobs and prices will be delayed. Eurozone preliminary inflation data is unlikely to provide markets with more clarity on the direction of travel
The US government has shut down from today as politicians failed to agree on a plan to continue funding it. This is not the first time this has happened, and it certainly won't be the last.
Headline inflation has increased to its highest level since the spring, but other German macro data published today suggests that inflation will not be the economy's biggest problem in the months ahead
With all driving factors set to remain in place, we expect inflation in Italy to continue to move within a narrow sub-2% band over the fourth quarter and confirm our forecast for average 2025 inflation at 1.7%
We expected CPI inflation to increase slightly in September from August amid a shallower annual decline in fuel prices – but low food prices surprisingly kept the headline figure unchanged, bolstering the argument for more rate cuts. Even so, we expect the National Bank of Poland (NBP) to postpone the move until November
The Reserve Bank of Australia holds its cash rate steady at 3.6%, in line with expectations. The cautious stance reflects concern over rising headline CPI inflation. As it stands, we think the probability of a rate cut at the November meeting has meaningfully diminished. The Aussie dollar remains supported
The Dutch central bank may start sending out more approvals for the transitioning of Dutch pension funds from a defined benefit to a defined contribution model this week. But with the 1 January transition date fast approaching, we may also start hearing about more delays. Meanwhile, a US government shutdown could weigh on economic sentiment
Oil prices came under pressure as noise grows around the potential for further supply increases from OPEC+, while US government shutdown fears provide a further boost to precious metals
Sentiment in Dutch commercial services and retail cooled in September, according to fresh data from the European Commission. While the mood isn’t gloomy, it does echo our view that growth remains stuck below potential – for now
