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Monetary Policy

Inflation Nowcast Points To A Moderation In June
Last week’s labor market data signal that US employment conditions remain strong – solidifying the case for a 25 bps rate hike at the Fed’s next meeting later this month (see The Numbers). Yet in order for the Fed to continue tightening beyond July,…
Daily Insights
Resilient US Labor Market Prompts Equity And Bond Selloff
Global stocks fell and sovereign bond yields surged on Thursday following the release of stronger-than-anticipated US labor market data. Data released by Challenger, Gray, & Christmas showed job cuts declined to 40,709 last month from 80,089 in May.…
Daily Insights
Eurozone Retail Sales Stabilize
Yesterday we highlighted that falling producer prices foreshadow lower CPI inflation in the Eurozone and argued that this dynamic is positive for the bloc’s consumption outlook. Easing price pressures will ultimately lift real wages, reducing the drag on…
Daily Insights
A Toxic Mix

On one hand, China will be exporting deflation to the rest of the world. On the other hand, core inflation is sticky in the US, making the Fed err on the hawkish side. Altogether, these crosscurrents are creating a toxic mix for risk asset prices.

Emerging Markets Strategy by Arthur Budaghyan
Fed’s Inflation Battle Risks EM Recessions

Markets continue to be tossed to and fro by central-bank policy, and risks of higher commodity prices. These are due to fiscal stimulus and exogenous weather and war-related risk, which could send food and energy prices higher this winter. We remain long gold outright, energy and metals producers via the XOP, XME and PICK ETFs, direct commodity exposure via the COMT ETF, and futures exposure to backwardation in copper (long 4Q23 copper futures vs. short 4Q24 copper futures).

Commodity & Energy Strategy
Declining Producer Prices Foreshadow Lower Eurozone CPI Inflation
Eurozone producer prices fell by more than anticipated in May. The -1.5% y/y decrease – which marked the first annual drop since December 2020 – was more pronounced than expectations of a -1.3% y/y decline and followed a downwardly revised 0.9% y/y increase…
Daily Insights
Not Much In The Minutes, Wait For Payrolls And CPI
The minutes from the June FOMC meeting didn’t reveal anything that wasn’t already known. They did explicitly say that “some” participants would have preferred a 25 basis point rate hike instead of a pause at the last meeting, but this was already evident from…
Daily Insights
World Economy Already In Recession

The world economy is likely already in recession, defined as world growth dipping to sub-2 percent. So far, the world recession has been China-led, but in the coming months it will change to being developed economy-led. Hence, while metals and industrial commodities may get some brief respite, high yield credit and stocks will underperform government bonds. New tactical recommendations are to overweight French luxury goods versus US tech, and to overweight USD/COP.

Counterpoint by Dhaval Joshi
June In Review
The performance of financial markets continued to improve in June, with most of the major financial assets we track generating positive abnormal returns. The US equity rally – which had been narrowly concentrated among tech stocks for most of the year –…
Daily Insights
US Housing: Rebound Or Head Fake?
In their just-published update of US housing market conditions,  our colleagues at the BCA Bank Credit Analyst focus on whether May’s strong showing in new home starts and sales in May – up 21% and 12%, respectively – is a head fake or the beginning of a…
Daily Insights

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