Economy
European sentiment continues to weaken, reinforcing the tactical case for US outperformance over Europe. The September Sentix Investor Confidence index fell to -9.2 from -3.7, defying expectations for an increase and signaling that August’s deterioration is…
August PPI inflation cooled, reinforcing the case for Fed easing and long duration with steepeners. Headline PPI fell 0.1% m/m, bringing the annual rate down to 2.6% after July’s 0.7% gain. Core PPI (ex-food, energy, and trade) rose 0.3% m/m (2.8% y/y).…
Core Europe’s industrial sector will relapse in the coming months due to US tariffs and a strong euro. Investors can play the imminent deflationary shock by being long Central European bonds. They should, however, hedge the currency risk vis-à-vis the euro.
USD-denominated Emerging Market bonds have been outperforming US corporates for the past year. We don’t think the rally is exhausted yet.
The August NFIB survey shows a fragile US economy with disinflationary signals and weak employment, supporting our defensive stance. The Small Business Optimism Index rose to 100.8 from 100.3, a six-month high, though still below December 2024 levels. Much of…
Despite the post-election selloff, investors should continue buying Argentine assets on weakness. Argentine markets sold off sharply after President Milei’s party suffered a crushing defeat in Sunday’s Buenos Aires election. Investors did not expect the…
Australia’s NAB survey shows underlying resilience, reinforcing our underweight on ACGBs and the case for AUD flatteners vs. CAD steepeners. The August survey was mixed, with current conditions improving to 7 from 5, while business confidence softened to 4…
Japan’s Eco Watchers Survey points to stabilization; JGBs remain unattractive and the yen’s near-term setup is less favorable versus USD. The August survey modestly beat expectations, with the current component rising to 46.7 from 45.2 and expectations…
Stable long-term inflation expectations and weak labor perceptions support a defensive stance. The NY Fed Survey of Consumer Expectations showed 1-year inflation expectations ticking up to 3.2% in August, while the 3-year (3.0%) and 5-year (2.9%)…
A fleeting greenback rally post Fed rate cut will offer a final chance to reset short dollar exposures. See why undervalued Asian FX are poised to lead the next leg lower in USD and how to position now.