Intuitively, a deal with Russia would help euro rates higher, but falling gas futures are already pushing down the curve through lower inflation expectations. Tensions with Russia are likely to stay, which means risk sentiment should remain fragile
Oil prices rose yesterday, in step with a global equity rally. However, peace talks remain a crucial area of uncertainty for the market
The federal government has unveiled a new agreement to finalise the 2026 budget and outline the main direction for economic policy in the coming years. While these steps will help reduce the public deficit, further action will be necessary to stabilise the debt ratio
The week draws to a close on a positive note after a significant selloff in risk assets as US rate cut bets continued to decline from the Federal Reserve's December meeting.
Oil prices are under renewed pressure amid ongoing peace talks to end the war in Ukraine
Euro rates are more focused on the improving macro story than on AI-driven equity jitters. This also means that Bunds may not prove an effective hedge against an equity sell-off
As negotiations to reach a final Omnibus I proposal have started, we analyse the impact each proposal would have on European banks. Despite the variations, all three proposals suggest a single path towards major scope reductions. This would be a positive for banks no longer required to report on ESG but complicate disclosures for those still in scope
UK inflation has peaked, but the latest data is a tad hawkish for the Bank of England. Food inflation was strong, which is red meat for the hawks. Services inflation rose, once volatile items are stripped out. However, we still expect the Bank to cut rates in December
Equities jitters have helped to steepen curves, though all within prior ranges and a 10y UST yield above 4%. As 10y Bunds richen versus swaps, the swap rate remains near the upper end of its range while the back end is sensitive to Dutch pension fund news. Meanwhile, latest TIC data show decent buying of US assets, including foreign demand for Treasuries
Tepid pricing in the industry and weakening price dynamics in agriculture are a downward risk for consumer prices. If consumer spending remains steady, inflation is likely to hover around the target over the upcoming year. A combination of factors might result in a low-inflation environment
We're not overly concerned about tightness in US repo of late. It does show that the liquidity environment is uneven. It appears that eligible standing repo participants don't need it, as there are minimal asks for it. Frustrating for the Fed, as it sees the effective funds rate creeping higher. T-bill buying from 1 December is far from perfect. But it will do
Romanian Inflation eased marginally in October to 9.8% versus September’s 9.9%. Declines in some food prices provided relief, but services inflation remains tricky. Wage growth slowed to just 4.1% in September, acting as a clear drag on demand. We maintain our year-end inflation forecasts at 9.6% for 2025 and 4.5% for 2026
EUR/USD has held onto its gains this week – though that largely looks a function of the slightly softer dollar. Yesterday's release of the German ZEW expectations index for November was not particularly encouraging. However, the aggregate ZEW figure for the eurozone as a whole ticked up, questioning whether Germany is increasingly becoming an outlier.
Real retail sales growth came in weaker than expected, implying stagnation since April. This warrants some caution regarding the consumption outlook. Still, households have relatively strong resources which could support robust spending as the year approaches an end
China's deflation is expected to continue, while the government releases data on retail sales, fixed asset investment, and industrial production. South Korea will release the unemployment rate
Fed Chair Powell's reticence to cut in December remains a driver of sentiment. Nevertheless, Treasuries are interpreting the various crosswinds as supportive of a rise in yields. We don't think the Bank of England will cut, but markets are not fully convinced. Gilt yields have little room to move lower as the Budget risk premium has already fallen
CPI inflation moderated below both our expectations and those of the market in October, thanks to a lower core rate, making yet another 25bp rate cut in November highly probable. Our baseline scenario had assumed a pause in monetary easing, but given Poland's ongoing disinflationary trend, we're bracing for another 25bp rate cut next week
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
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
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
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
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
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
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
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
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
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
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
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
The US government remains shut, which means the BLS will likely not release the September jobs report this Friday. Yesterday's ADP numbers, however, injected a strong dose of dovishness to keep investors going for a few days longer.
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
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
Every time you think the AI rally has topped out, it finds another gear. Yesterday was one of those days... Nvidia surged nearly 4% to a fresh ATH after reports that it will deepen its partnership with OpenAI to build massive new data centers and AI infrastructure.
We expect the Riksbank to keep rates on hold at 2.0% on 23 September, in line with expectations. Markets are pricing in a less than one-in-three chance of a cut. Rate projections may well be kept unchanged but could still suggest some possibility of another cut. Our call for now is for no more easing. Sweden's krona has room to appreciate into year-end
US equities broke one more record before the widely awaited Federal Reserve (Fed) decision, while the Stoxx 600 fell more than 1% as rate-sensitive sectors including banks and insurers led the index lower.
Amid signs of economic recovery, the decline in temporary staffing hours in the Netherlands is expected to come to a halt this year. However, an upward trend will not materialise until 2026. Market conditions remain challenging, shaped by structural labour shortages and stricter regulation. In response, the sector needs to make a strategic shift
Oil prices extended last week’s gains this morning following the latest attacks by Ukraine on refineries and ports in Russia
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August’s PMI remained in the contraction zone, as supply chain issues dampened output. However, new orders increased, and confidence remained upbeat. The Czech economy appears poised to hum along smoothly, with no need for loose monetary policy
An uptick in German inflation suggests that the risk of significant inflation undershooting is still more than overdone. At the same time, the increase weakens the case for an ECB rate cut at the September meeting
Wednesday saw no further progress in the administration's removal of the Fed's Lisa Cook. The FX environment remains choppy, but we note the continued low fixings in USD/CNY – seemingly a move by Beijing to preserve the purchasing power of households and boost consumption. Elsewhere, healthy car sales data in Germany can provide some support to the euro
The Asian session saw a shaky start as US President Donald Trump posted on his Truth Social account that Federal Reserve Governor Lisa Cook will be removed effective immediately.
The immediate reaction saw a gauge of the US dollar retreat as much as 0.3% and gold rose as much as 0.6% to around $3385/oz.
I strongly invite you to check these two pieces to spot how strong the reactions are after the dovish speech from Powell:
Although Europe faces significant housing shortages, residential construction is unlikely to rise this year. Permits for new homes are increasing, but growth remains slow. The infrastructure sector continues to grow, but significant gains from the new NATO agreement are unlikely
New Zealand’s central bank (RBNZ) cut its Official Cash Rate (OCR) as expected by 25 basis points (bps) to a three-year low of 3% today.
The major surprise was the RBNZ’s monetary policy guidance that skewed towards a more dovish stance than expected. Its latest forward guidance shows that the average OCR is projected to fall to 2.71% by the end of 2025, lower than the earlier projection of 2.92% made in May.
Nasdaq and the broader tech sector are starting the week more cautiously, with overnight futures showing the Dow holding up relatively well against the more risk-sensitive Nasdaq.
(An informal invitation to consult our most recent analysis on the Dow)
Friday's meeting between Trump and Putin seems to have gone smoothly. Details are scarce, but so far there are no signs of fresh tensions with Russia and no new sanctions on countries such as China and India that continue buying Russian oil. US crude opened the week with a gap lower but has since recovered part of its losses. Direction remains uncertain, though the absence of immediate stress is notable.
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 core inflation accelerated to 0.3% MoM in July, but markets don’t think that is enough to prevent a September Fed cut. That paves the way to more USD weakness, although some caution may prevail ahead of Friday’s Trump-Putin meeting. The market is adjusting expectations, but the risk still seems asymmetrical for CEE currencies
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
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
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
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
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
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 composite PMI increased from 50.6 to 51 in July. With uncertainty all around, an economy showing slight growth, increasing employment and weak inflation sounds surprisingly benign
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Real retail sales fell short of our and market expectations, but the overall picture for private consumption is still stronger than observed in Q1. Economic growth improved despite soft external demand due to domestic factors. We estimate 2Q25 GDP growth at 3.5% vs. 3.2% posted in the previous quarter, and see the Polish economy rising by 3.5% in 2025
Brazil has opened a 3.5% buffer, which can expand to 5% should the Fed cut. That paves the way for 200bp of cuts, but that can be under or over shot depending on how the fiscal deficit is dealt with. Mexico can cut without the Fed, but by no more than 50bp. But that's a stretch as spreads are tight; far better for the cuts to happen under the cover of Fed cuts
Since early 2023, countries in Southern Europe have seen strong declines in unemployment, while those in the north have seen increases. This is helping eurozone convergence, adding to tighter government bond spreads in the eurozone, and is ultimately making life easier for the European Central Bank
Donald Trump continued his tariff reveals over the weekend, announcing that the EU and Mexico would be hit with 30% tariffs from August 1st. That's far more than what the EU expected — they were hoping for a figure closer to what the UK secured: a 10% tariff, with exceptions for key sectors like metals and pharmaceuticals. Instead, they got a big, fat 30%.
The dollar benefited from the resulting backup in short-term rates and managed to end near the middle of the G10 performance table for the week. The price action suggests to us that current levels price in a lot of bad news for the US dollar, which has had the worst first half of the year since Nixon took the currency off the gold standard in 1973.
Next week's highlights are monetary policy decisions in Australia and South Korea. In addition, China and Taiwan will release inflation data, while Taiwan publishes trade data. Singapore will report its flash estimate for second-quarter GDP
Vietnam is the first Asian country to secure a trade deal with the US, avoiding punitive 'reciprocal tariffs'. While higher tariffs on value-added exports and potentially significant transshipments could hurt GDP growth, favourable tariff differentials might accelerate the supply chain shifts Vietnam has been benefiting from
Rates Spark: Back end vulnerabilities. While there's been a material rate-cut-driven fall in US market rates, there are some risks ahead for longer tenor rates coming from inflation and the fiscal deficit. In the UK, a potential slowdown of the Bank of England's balance sheet could help keep longer-dated Gilt yields down, but the global environment is not conducive to this
Is this wishful thinking or a fundamental change? Germany's most prominent leading indicator increased for the sixth consecutive month on hopes that fiscal stimulus will boost growth
We panicked prior to the tariff pause in April as US Treasuries behaved like a risky asset under pressure. There was lots of speculation as to who was selling and how heavy it was. We'll know more soon. But as we get the data, remember that large dips negative in these data are typical. If we were to get that, we'd really need to see the May data before extrapolating
Risk has calmed and Treasury yields are edging higher again, as we head close to a big Wednesday (FOMC, TIC data and 20yr auction). In the eurozone, the 10y EUR swap rate remains confined to its 2.4% to 2.6% range as the Israel/Iran conflict only adds to a long list of uncertainties while at the front-end energy price risks keep the ECB on edge
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We see both supply-side and demand-side reasons for the relative outperformance of production in the high-tech manufacturing sector. On the supply side, high-tech manufacturing sectors tend to receive more domestic policy support, creating stronger incentives for capital expenditure.
Nvidia's upbeat quarterly forecast signaled that the AI boom is not over, but it failed to bring buyers back into the "Magnificent Seven" stocks that have dipped in the last three months.
The first FinMark Summit is set to take place at the Dutch Hall in the City of London on April 30th, with speakers and attendees from over 50 brokers and investment platforms in attendance.
