Monetary

Our Portfolio Allocation Summary for November 2024.

This week, we update our Central Bank Monitors (CBMs), that help us calibrate how monetary policy should be adjusted in developed-market economies. Our conclusion is that while overall, easier monetary settings are required, there a few trade ideas that arise from the divergences in signals amongst G10 countries.

This Strategy Insight presents our view on today’s rate cut by the Bank of England as well as the budget announced by the UK government last week.

The prospect of a new trade war more than offsets the other pro-business parts of Trump’s agenda. With the labor market already weakening going into the election, we are raising our 12-month US recession probability from 65% to 75%.

Our thoughts on the bond market’s reaction to the election and this afternoon’s FOMC meeting.

Over the next few months, Japan’s new government will ease fiscal policy, which will improve domestic demand on the margin. Monetary policy may tighten further in the short run but not too much over the long run. The geopolitical setting drives Japan into accommodative economic policy.

A reaction to this morning’s employment report and a preview of the potential bond market implications of next week’s US election and FOMC meeting.