ICE has decided again not to include the EU bonds in its sovereign indices, sending EU speads wider. In the broader context EU bonds are still part of a considerable smaller AAA-universe since the last US downgrade
Yesterday’s summit in Washington resulted in a clearer roadmap for peace talks and some openness about security guarantees from the US. But the euro was offered as news flowed, perhaps on the view that the bulk of key territorial negotiations are still ahead of us. US macro developments remain a bigger driver for EUR/USD, which still faces upside risks
UK inflation was higher than expected in July, but given it was driven primarily by airfares, the Bank of England won’t be too concerned. A November rate cut hangs in the balance, though it remains our base case
US Treasuries traded heavy on Monday, on a day of complexities and different cross winds that makes interpretation tough. Bunds remain a good safe asset to hide for any US-driven turmoil, which can help keep yields close to swaps. Whilst we still see Bunds underperform swaps due to supply pressures, the room is more limited since 'Liberation Day'
Oil prices are lower this morning following Trump-Zelensky talks, with focus now turning to a possible meeting between the Ukrainian leader and Russian President Putin
The Reserve Bank of New Zealand (RBNZ) is widely expected to cut rates by 25bp to 3.0% on 20 August. We expect to see indications that one final cut will follow, in line with market expectations and our own call. We retain a constructive view on NZD/USD, primarily on the back of expected USD weakness as the Fed restarts cutting
On a day when all eyes are once again on the war in Ukraine and with another crucial meeting later today at the White House, just-released trade data serves as a good reminder of the adverse effects of the ongoing trade tensions.
The industry's annual price drop deepened in July, marking six consecutive months of negative price trends. Weak demand from key trading partners continues to weigh on prices for capital and intermediate goods, while consumer goods prices are still rising. Strong price activity in food production will further drive up the CPI
Oil opened lower this morning amid reduced concerns over tougher sanctions against Russia following the Trump-Putin summita
The great-and-the-good of the American central banking world are off to the Fed’s annual Jackson Hole conference. And for Chair Jerome Powell, his appearance could hardly come at a more challenging moment. James Smith looks at the key questions facing the embattled Fed boss as financial markets brace for another fiery week to come
Polish headline inflation has been confirmed at 3.1% YoY in July, from 4.1% YoY in June, as the effect of the partial unfreeze of energy prices in mid-2024 died out. With inflation within the tolerance band of the National Bank of Poland's target (2.5%, +/- 1ppt), the central bank now has room to continue its monetary easing cycle
Today’s flash GDP data has confirmed our forecast for the second quarter, with annual growth continuing to expand at a modest 0.3% pace. We don’t expect major improvements at this stage, with risks actually tilted to the downside, and we continue to expect a 0.3% advance for the full year in 2025
At face value, the UK's 0.3% second-quarter growth performance looks reasonable amid a flurry of global and domestic headwinds. But this is largely concentrated in components not intrinsically linked to underlying economic performance, and the Bank of England will take these figures with a pinch of salt. We expect growth to slow in the second half
US Secretary Bessent said the Fed should cut by 50bp in September, and that rates are 150-175bp above where they should be. Markets aren’t considering a 50bp move as an option, and we doubt they will unless there are hints in that direction from Fed members or if the jobs data falls much further. Today, Norges Bank should hold rates, with some minor hawkish risk
Oil prices came under pressure yesterday after bearish supply/demand forecasts for the market. There’s also plenty of uncertainty heading into Friday’s Trump-Putin summit
Thursday likely sees US PPI core inflation back up to 3%, while core CPI inflation was confirmed earlier this week at 3.1%. In all probability these inflation rates will be on the rise in the coming months, and can easily touch 4%. We see, for example, how proposed eSLR changes are good for Treasuries. But Treasuries can't fully ignore evolving inflation data
The proposed recalibration of the enhanced Supplementary Leverage Ratio, which applies to Global Systemically Important Banks and their subsidiaries is open for public comment until 26 August 2025. Here we assess what it might mean. Even without special treatment for Treasuries, it has the capacity to meaningfully add banking influence to the market
A sharp plunge in industrial production data suggests that the initial signs of an inventory cycle turn were mainly driven by US frontloading rather than a genuine cyclical recovery. Industrial weakness looks set to continue
Poland’s external current account surplus in June was a positive surprise, as it was also driven by a positive balance in merchandise trade. One data reading does not necessarily signal a new trend – but it may suggest a change in underlying macro developments, especially softer domestic demanda
The Polish economy grew by 3.4%YoY in the second quarter, compared to 3.2%YoY in the first quarter. While the flash estimate did not provide a breakdown of growth components, high-frequency indicators suggest continued expansion in the services sector, stagnation in industry, and a contraction in construction
Despite some short-term supportive factors for the market, oil prices continue to edge lower ahead of Friday’s Trump-Putin meeting
South Korea’s unemployment rate fell unexpectedly to 2.5% in July, despite private sector hiring softening. Although weak domestic demand requires supportive macro policies, the BoK is likely to take a wait-and-see approach in August to see if property prices m
German 30-year yields are on the rise, with the curve hinting at more to come. German fiscal plans and Dutch pension fund reform are factors in play. The US is in a similar mode, with fiscal and CPI data followed by upward pressure on long yields
Inflation in the Netherlands continued its downward trajectory in July, dropping to 2.5% year-on-year from 2.8% in June. A sustained return to the 2% target is not in sight yet, however, as service inflation remains quite stubborn
Inflation in Romania rose sharply in July, reaching 7.8% - well above our forecast of 6.4%. The entire deviation stems from the energy sector, particularly electricity prices, which spiked by almost 62% versus the previous month. As a result, we have revised our year-end inflation estimate upward to 9.3%
We expect a 0.4% month-on-month core CPI print in the US today, above the 0.3% consensus. That should offer the dollar support, but we don’t think that will prompt markets to seriously price out a September cut, meaning we can see decent buying in the EUR/USD dips. Headlines on upcoming US-Russia-Ukraine talks also remain relevant for markets
The UK jobs market is undoubtedly cooling, though a more modest fall in payroll employment suggests that the worst may be behind us, following big tax and Living Wage hikes. Better news on wage growth suggests the Bank can still afford to cut rates in November, though after last week's hawkish meeting, this call has become less clear-cut
As expected, the US and China confirmed a 90-day extension of their trade truce, after several rounds of “productive” negotiations. This keeps tariffs steady until November. Yet after the wave of August tariff hikes, the relative handicap for Chinese exporters has narrowed somewhat
Norway’s central bank surprised with a cut in June. However, we are much more confident that it will keep rates on hold at this week’s meeting, following a rebound in inflation and a significant weakening of the krone. We believe EUR/NOK is approaching an inflection point and anticipate NOK strengthening into year-end
We expect the FX market to remain predominantly driven by data, and continue to treat expectations about a potential ceasefire in Ukraine with caution ahead of Friday’s Trump-Putin meeting. We expect an above-consensus 0.4% MoM core CPI tomorrow, but any dollar support may only prove short-lived as a September rate cut remains on the cards
Last month, we discussed how the solid US job market was giving Fed Chair Jerome Powell the confidence to resist political pressure to cut rates. Well, the huge downward revisions to the May and June jobs data have undermined both Powell’s resistance and the dollar. We now look for three Fed rate cuts, starting in September, and a broadly weaker dollar
Softer growth and inflation data for the second quarter are likely to convince the Reserve Bank of Australia to cut rates, following its cautious stance in July. Markets are fully pricing in this August cut and another one by year-end (which we also expect), meaning downside risks for AUD are limited. We have revised our AUD/USD forecast higher
The same day President Trump installed an (interim) dovish ally in the FOMC, the Bank of England struck a more hawkish tone, narrowly voting in favour of another 25bp rate cut. The US calendar is very quiet today, and some focus will be on Canada’s jobs figures. EUR/USD may wait until next week for a break above 1.170
The Reserve Bank of Australia is likely to cut its cash rate by 25bps to 3.6%. Meanwhile, markets await data on Chinese inflation, industrial production and retail sales, South Korean unemployment, and Japanese GDP
Oil prices settled lower yesterday amid growing hopes that Presidents Trump and Putin will meet to discuss a Russia-Ukraine peace deal
The Bank of England has cut rates by a further 25 basis points to 4% but the statement hints that officials think the easing cycle is nearing its end. Policymakers are visibly worried about a more persistent bout of inflation as the headline number is way higher than target. For now, though, we're sticking to our call of another cut in November
Potential US Fed rate cuts, along with continued central bank buying and ETF inflows, could send gold to fresh highs. And that's why we're changing our forecast
US President Donald Trump appears to be advancing efforts to broker a Russia-Ukraine truce. Markets are pricing in cautious optimism: oil, dollar, and the Swiss franc all came under pressure. CHF remains vulnerable amid the collapse of US-Switzerland trade talks. The Bank of England is widely expected to cut rates today, but don’t expect any dovish shift
The Philippines' GDP growth picked up in the second quarter compared to the first, largely driven by a surge in goods exports ahead of tariffs being implemented. We don't believe that the relative strength in today’s data will deter the central bank from cutting rates in August, as CPI inflation remains firmly below the inflation targe
Disappointing industrial production data for June and a downward revision for May suggest that instead of staging a cyclical rebound German industry remains stuck
Oil prices have not reacted to President Trump slapping an additional 25% tariff on India over its purchases of Russian oil, possibly believing there's still room for negotiation
The incoming industrial and retail data for June did not alter the overall picture of the recent dichotomy in trends. Industrial production continues to decline, while retail sales are rising. We do not expect these trends to change significantly for the remainder of the year
We're changing our call on the Fed. The pressure to cut rates is intensifying as the US jobs market and the growth story are no longer looking quite so solid. While prices will rise due to tariffs, we don't see long-term inflationary pressures and believe the Fed may well start cutting rates from next month
'Tariff' may be the most beautiful word in Donald Trump's dictionary. And while tariffs will continue to dominate headlines for the rest of the year, let me introduce my economic term of the summer: Power Play
Industrial production in Italy has likely reached a bottom, edging up slightly in June. However, a clear recovery is not imminent. It might come when the German infrastructure investment plan is implemented
Industrial production continued to expand in June, although new orders fell short of expectations, particularly given the decline in foreign orders. Meanwhile, the construction upturn is likely to continue, driving the Czech recovery and bolstering household budgets. Wage growth picked up in both manufacturing and construction
Retail sales increased by 0.3% in June, with the year-on-year growth pace accelerating from 1.9% to 3.1%. This suggests that household consumption is likely to underpin growth in the second half of the year
While the Reserve Bank of India held rates steady, it significantly lowered its inflation outlook. The combination of softer inflation and emerging downside risks to growth suggests there is still room for further rate cuts - particularly if monetary policy transmission improves. Meanwhile, a stable rate differential should be supportive of the rupee
President Trump hinted that Kevin Warsh, Kevin Hassett and two others are leading the race for the next Fed Chair and might be announced soon after Governor Adriana Kugler’s early exit. We think the dollar would welcome Warsh, but would get hit by Hassett’s nomination. We retain a short-term USD bearish bias as FX has room to catch up with Fed pricing swings.
The oil market is awaiting greater clarity on the potential for secondary tariffs on buyers of Russian oil, with President Trump’s deadline for a Russia-Ukraine peace deal scheduled for Friday
Consumer prices maintain solid growth, with persistent core inflation outweighed by softer food price dynamics. Both headline and core inflation may hover close to the 3% upper bound of the tolerance band around year-end, which should foster a hawkish stance by the Czech National Bank. Pro-inflationary scenarios take the stage for now
One could be forgiven for thinking that President Trump has now turned his attention to disassembling the BRICS political grouping. India, Russia and Brazil are squarely in focus currently. And benign market conditions in August clearly rely on no deterioration in the current US-China detente. Away from geopolitics, the focus today is on US ISM services
With South Korean consumer inflation near 2% and GDP projected to rise, the Bank of Korea is likely to wait for clearer signs of housing market stability before easing. We still prefer an October rate cut over August.
Following Friday's soft US jobs report, the dollar looks to stay offered this week. The firing of the Bureau of Labor Statistics chief, after President Trump accused the agency of manipulating jobs data for political gain, also adds pressure. And the early resignation of Fed Governor Adriana Kugler – opening up the pick for Powell's successor – won't help
Market sentiment is turning sour after last Friday's weak US jobs data that led to the firing of the Chief of the Bureau of Labor Statistics (BLS)! The BLS reported just 73,000 nonfarm payroll gains for June — far below expectations.
Oil prices are trading weaker this morning after OPEC+ agreed on another large supply hike for September
Steady inflation confirms that the eurozone is in Lagarde’s “good place” at the moment. Expect inflation to remain around target for the months ahead
As discussed in the USD section, new 'reciprocal' tariffs are having little market impact. Canada deserves special attention in our view, though, especially after Mexico secured another pause extension yesterday.
The US has announced new 'reciprocal' tariffs (Canada, Switzerland and New Zealand are notable targets) while keeping the base rate at 10%. The muted market impact signals lingering expectations of trade deals and the much greater focus on data. Today, we expect payrolls at 115k and unemployment at 4.2%, which could lead to some consolidation of USD gains
While capital commitment by US hyperscalers is surging, the gap between AI pilot schemes and full deployment remains wide. Most enterprises have launched Gen AI pilot programmes, yet scaling to full production is often difficult. This shows that many firms see the potential of AI, but face organisational challenges in implementing the technology
After an already eventful week, markets will have more to digest on Friday. The US payroll numbers will be the highlight, although the potential spillovers to other markets have lessened. Furthermore, we see room for a steeper euro curve after the recent flattening spell. The 10Y Bund should also start underperforming swaps as risk sentiment improves
The main events of the week will be key data reports from China, Japan, South Korea and Taiwan as economists try to assess trade-war effects across Asia. Also, we expect the Reserve Bank of India to hold interest rates steady
If the FX options market is any guide, and once this week's big event risks are out of the way, investors are pricing a quiet August for markets. Low levels of volatility inevitably draw focus to the carry trade – a very popular strategy over recent months. Here, we back test strategies and evaluate the risks and opportunities in the EMFX space
Headline inflation remained unchanged at 2% year-on-year. Looking ahead, German and eurozone inflation are likely to fulfil the ECB's old target of 'below but close to 2%'
The slowdown in energy prices was offset by rising costs in food and certain services, leaving headline inflation unchanged. Given the current subdued economic environment, we expect inflation to hover around current levels, with a temporary deceleration likely
Headline inflation fell to 3.1% year-on-year in July from 4.1% in June, yet this was higher than our forecast and market expectations. We don't think this will derail the rate-cut train as disinflation remains on track. We think the National Bank of Poland will continue monetary easing and deliver a rate cut at the next meeting in September
Taiwan's GDP growth surged to 8.0% YoY in the second quarter as external demand contributed a whopping 5.8ppt. We have been nudging our forecasts higher in previous months, but consistently stronger-than-expected data merits a more aggressive upgrade, and we are now revising our 2025 full-year growth forecast to 5.8% YoY
The unemployment rate remained stable at 6.2% in May, with the number of unemployed people trending down by 62,000 people. Even though economic growth slowed again in the second quarter and uncertainty remained high, the labour market continued to show resilience
Despite two dissenting votes, the Fed delivered a broadly hawkish hold, with Chair Powell remaining firm on his inflation call and forcing markets to trim September cut bets. The dollar’s rally may have a bit more to run as today’s core PCE figures may come in above consensus and tomorrow’s jobs figures prove good enough to endorse the Fed’s prolonged pause
South Korea reached a 15% tariff deal with the US, committing $350 billion in investments and buying $100 billion in US LNG and other energy imports. While some specifics remain unclear, the deal broadly aligns with expectations and has been positively received by markets
China's official manufacturing purchasing managers’ index slowed to a three-month low of 49.3, as new orders swung back into contraction
Oil prices strengthened further after President Trump threatened penalties on India for importing Russian energy. Meanwhile, Comex copper prices plunged after the US provided new details about its 50% import tariffs, which for now only apply to semi-finished copper products
Comex copper plunged by more than 19% in minutes after President Trump excluded refined metal from his planned import tariff. The 19% fall on Wednesday was the largest intraday fall on record. Prices later pared some of the losses
With a reversal of the positive frontloading effects, the German economy fell back into recessionary territory in the second quarter. The return to growth and a strong economy remains a long and complicated project
China's Politburo meeting showed that the policy stance will remain supportive while continuing to emphasise the recent focus on building domestic demand, supporting the hardest hit exporters, and addressing China's difficult "involution" problem. All eyes will now be on China's Fourth Plenum and the upcoming 15th Five Year Plan
Consensus expects zero GDP growth from the eurozone in the second quarter, but the outlook remains positive, supporting our bearish take on rates. The Fed will most likely hold today, which could intensify Trump's campaign against Powell. This would feed the bearish narrative on longer-dated USTs. We still see the Fed cutting by the end of this year
The Canadian dollar has dropped less than other G10 currencies during this round of USD appreciation. For the moment, domestic factors aren’t playing much of a role, and markets remain quite conservative on Bank of Canada rate cuts, pricing in only 15bp by year-end.
We expect another leg lower in EUR/USD today, driven by an above-consensus 3.3% quarterly annualised US GDP, which should come in stark contrast with stagnant eurozone numbers. After that, we expect a broadly unchanged stance by an FOMC focused on defending its independence. In Canada, we could hear a slight dovish tilt in line with trade uncertainty
The Monetary Authority of Singapore (MAS) held its policy steady, but the tone was notably less dovish. While MAS made no changes to its GDP growth or inflation forecasts for 2025, the qualitative assessment indicated a more optimistic outlook than before. Although easing at the October policy meeting cannot be entirely ruled out, we think it's unlikely
The Commodities Feed: Oil rallies as Trump confirms new deadline for Russia. Oil prices extended their rally yesterday as President Trump confirmed that he will give Russia 10 days to reach a truce with Ukraine
The biggest takeaway from yesterday's sell-off in the euro was that some of this year's highest conviction trades were becoming a little stale. EUR/USD has already had a decent correction even before this week's negative event risks. Expect investors to remain cautious. For today, we'll be focusing on US JOLTS data and some European GDP dataa
Oil prices rallied after President Trump said he would shorten the deadline for Russia to come to a deal with Ukraine to end the war, raising supply concerns
US tariffs have had a serious adverse effect on overall South Korean exports, an examination of data indicates. Goods subject to sectoral tariffs showed notable declines. In addition, the heavy reliance on exports to both the US and China further complicates challenges for Korean exporters going forward
Rates didn't move much in reaction to the EU trade deal. If anything, eurozone markets seemed slightly disappointed by the details. The focus will now be on upcoming data releases. In the US, we have important jobs data this week, which may drive the next rates move. Meanwhile, Dutch pension reforms could leave an important mark on fixed-income markets
The biggest takeaway from yesterday's sell-off in the euro was that some of this year's highest conviction trades were becoming a little stale. EUR/USD has already had a decent correction even before this week's negative event risks. Expect investors to remain cautious. For today, we'll be focusing on US JOLTS data and some European GDP data
Dutch pension reforms are underway, adding to the upward pressure on longer-dated euro rates. The eventual flows are hard to estimate, but the DV01 impact from unwinding interest rate hedges could be €500m. We may also see a broader rebalancing of the fixed income portfolio, whereby government bonds will be reduced. But delays are still a risk
The announcement of a US-EU trade deal has lifted equity futures on both sides of the Atlantic. Investors are more worried about a bubble now than a recession. The deal takes some pressure out of the 1 August tariff deadline and shifts the focus back to a very busy week of macro data. Here, we think the Fed meeting, inflation and jobs data can support the dollar
A trade deal between the US and EU proved positive for sentiment this morning in the oil market. However, attention will likely turn to OPEC+ output policy from September
The press conference following the European Central Bank's decision to keep rates on hold confirmed the current wait-and-see stance. The bar for further rate cuts looks high but we still wouldn't rule out yet another cut in September
Housing transactions are very weak given a general lack of affordability, but with supply now on the rise, there is concern about what the implications will be for home prices and household wealth in coming quarters. Residential construction may also become more of a headwind for broader economic growth
Japanese government efforts to moderate inflation are working, though underlying Tokyo price pressures remain elevated. Even so, the Bank of Japan is expected to stand pat next week. Its quarterly outlook report will be closely watched
US-China trade talks will be the main event of the week, along with China’s July purchasing managers’ index. Other key data reports are expected from South Korea, Japan and Taiwan. The Bank of Japan is seen leaving rates unchanged
As expected, yesterday brought no cut from the ECB, but the press conference did leave us with a hawkish aftertaste. After a series of decent PMIs, the ongoing trade tensions are the only remaining hurdle for rates to test higher. A trade deal would enable the 10Y euro swap rate to push for levels closer to 3%
Oil prices edged higher yesterday amid optimism over trade talks. This optimism is offsetting expectations of supply increases from Venezuela
Interest rates have moved higher around the world as equity markets rally on a sense of optimism. The biggest factor behind that this week has probably been the US-Japan trade deal and the sense that a US-EU deal is close too. ECB President Christine Lagarde added to that trend yesterday with a more upbeat take on activity. Expect the euro to stay supported
Despite a long list of nearer-term downside risks for the economy, the announced fiscal stimulus is still working its magic – and German businesses are continuing to ride the wave of optimism
Bank lending growth accelerated again in June, indicating that global economic uncertainty is not significantly dampening lending at this time
The jobs market continues to hold up despite concerns about a cooling economy, while officials remain nervous about the effect of tariff-induced price hikes on inflation. We see no interest rate cut this month, but the Fed is expected to start laying the groundwork for a move, most likely in December
The current confidence picture in Italy is mixed, with visible improvements among consumers and manufacturers and a small deterioration in services and construction. This still seems consistent with positive GDP growth in the third quarter of 2025
Shifts in demographics and labour force participation were key drivers behind the decline in employment in the second quarter of 2025. With labour demand softening alongside supply, a near-term recovery seems unlikel
