Consumer

In this report, we argue that the Bank of Japan is unlikely to hike interest rates this week, but the relative trajectory of bond yields in Japan is higher. This warrants an underweight position in JGBs and a leveraged bet on a higher yen. The positioning for equity investors is murkier, as progress on corporate reforms is necessary for a rerating in Japanese shares. That is not yet very clear. The bottom line is: Stay long the yen.

This Special Report examines the post-pandemic evolution of consumption growth, relative equity sector and subindustry performance and recent commentary from consumer-facing companies to assess the likelihood that softer spending among lower-income households will spread to middle- and upper-income households.

The US suffers from enough imbalances to produce a mild recession. Unfortunately, such a recession could lead to a significant bear market in stocks, just as it did during the very mild 2001 recession.

The ECB will cut rates once more this year; however, markets underprice how far it will ease next year.