Economy
The moderation in core PCE in April was a step in the right direction towards a Fed easing. Our Global Investment Strategists also highlighted that outside of a few pandemic-related “catch-up” categories such as shelter, health care, and auto insurance, CPI…
Consumption accounts for two-thirds of the US economy, and our recession view relies heavily on the deteriorating outlook for US consumers. That said, dissecting US GDP into its components reveals that consumption tends to merely stabilize during…
Corporate and junk bonds are the fixed-income sectors that are most exposed to an economic downturn. We’ve highlighted that markets continue to price in a Goldilocks scenario, with spreads narrowing despite ongoing deterioration in the labor market. Spreads…
According to BCA Research’s Global Asset Allocation service, the economy has been in the “Overheating” phase of the cycle for a while, with signs of slowing growth but also stubbornly high inflation. The most likely next phase is “Recession,” though the…
MORENA has once again swept the Mexican election: Claudia Sheinbaum will be president, with little to no constraint in Congress. All in all, Mexican politics will remain stable and overall supportive of markets. In the medium term, fiscal spending will return to conservatism and the constitutional reforms will lead to mixed fiscal and economic repercussions. In the long term, however, fiscal and institutional risks will rise. We advise investors to remain overweight Mexican risk assets relative to EM in cyclical and structural time horizons, but prepare for Mexican markets to sell off in absolute and relative terms in the next couple of months.
The ISM manufacturing PMI declined further in May, from 49.2 to 48.7, thus disappointing expectations of a slower pace of deterioration. Similar to dynamics observed with their Chinese counterparts (see Country Focus), both US manufacturing PMI measures…
The Caixin Chinese manufacturing PMI reached a two-year high in May, expanding at a larger-than-expected rate from 51.4 to 51.7. The Caixin figure thus contrasts with the alternative NBS manufacturing PMI, which unexpectedly contracted in May. The Caixin…
The Swiss KOF Barometer is a composite leading indicator of the Swiss economy. It surprised to the downside in May, coming in at 100.3 from 101.9, below expectation of an acceleration to 102.1. Switzerland’s economy is highly pro-cyclical and…
According to BCA Research’s Commodity & Energy Strategy service, the oil demand forecasts from the IEA, EIA, and OPEC are too optimistic. The IEA, EIA, and OPEC all anticipate oil demand growth to slow this year following a robust post-pandemic…
Our Portfolio Allocation Summary for June 2024.