Monetary Policy
Investors should keep bond portfolio duration close to neutral despite a likely mild dovish surprise from the Fed over the coming months. The FOMC voted on Wednesday to keep policy rates unchanged, holding the target range for the fed funds rate at 3.75 to…
Investors should fade Canadian rate hikes priced for the second half of next year. The Bank of Canada hiked interest rates on Tuesday, raising the policy rate from 2.25% to 2.5%. The move was expected, and investors are pricing in another four to five 25…
Given that the economy’s productive capacity is limited, government stimulus will lift nominal growth but do little to increase real output growth. The upshot will be rising inflation and wider twin deficits. This is bearish for the currency, bonds, and stocks.
The Central Bank of Turkey cut its policy rate from 37% to 36% as inflation fell below 30% for the first time in about 5 years. Our Emerging Markets strategists believe that the slowdown in inflation and attendant monetary easing will be temporary. Weak…
Hot September UK CPI will support BoE hawkishness in the near term, but investors should expect a dovish surprise over the next 12 months. Headline UK CPI rose to 3.5% y/y from 3.1%, which was above consensus. Core CPI rose to 2.8% from 2.6%, in line with…
Despite a stronger-than-expected employment report, the BoE is unlikely to hike as much as markets anticipate. Payrolls rose by 13k in September against an expected decline, and August’s initially reported decline was revised to a gain. The unemployment rate…
EM local bonds face near-term turbulence from rising inflation, global risk aversion, and currency weakness. Use the sell-off to build exposure: medium- and longer-term fundamentals remain favorable.
Investors should shift to a long duration stance in response to a further shift lower in inflation and/or a material tightening in financial conditions. Global government bond yields have surged since late August, and many investors are wondering whether a…
The RBI raised its repo rate to 5.50% amid expectations of reaccelerating inflation and a weakening INR. Our Emerging Markets strategists expect the reacceleration in inflation to be temporary, as the Indian economy has absorbed much of the shock from energy…
Our GeoMacro strategists remain bullish on equities and and long-term bulls on bonds. They caution investors against treating the recent rise in yields as a reason to turn defensive. Our colleagues held both calls over the past month. The equity call proved…