Economy
Over the past month, market participants have shifted their expectations for the path of the Fed funds rate. At the start of May, expectations were for the Fed to cut rates below current levels to just above 4.5% by the end of the year. Participants now…
According to BCA Research’s European Investment Strategy service French banks are better positioned to weather current headwinds than their European peers. The team sees limited risks to the French banking sector from the recent banking turmoil. French…
Expectations for oil demand growth through 2023-24 are way too optimistic. Until these expectations fall to -0.5-1 percent, the oil price has further downside. Plus: collapsed complexity confirms that AI is in a mania, while basic materials stocks and ZAR/EUR are rebound candidates.
The latest Eurozone data releases show the impact of the ECB’s aggressive monetary tightening cycle. The contraction in M1 money supply – which includes currency in circulation and overnight deposits – deepened to -5.2% y/y in April while the broader M3…
One of the most noteworthy developments of the Q1-2023 earnings season was that the net profit margin widened from 10.7% in Q4-2023 to 11.1%. This marked the first margin expansion since the 12.9% peak in Q2-2021. The year-end target for net profit margin is…
Profits of Chinese industrial firms dropped by 20.6% y/y in the first four months of 2023, extending the contraction that began in the second half of last year. Notably, the weakness remains particularly pronounced across the manufacturing sector, which…
The Turkish lira hit a fresh record low on news that President Recep Tayyip Erdogan secured another five-year term following Sunday’s run-off election. Notably, despite an economic crisis (including headline CPI inflation which peaked at 86% in October) and…
Market pricing of Fed rate expectations has moved closer in line with our US bond strategists’ expectations. According to the CME FedWatch tool, Fed funds futures are pricing in a 40% chance that the fed funds rate will be lower than current levels following…
A major divergence has emerged between the performance of the S&P500 and the US equal-weighted stock index. Even though the S&P500 index has been grinding higher, the US equal-weighted index has failed to rally. Such a pronounced decoupling…
According to BCA Research’s US Bond Strategy service Treasury yields will remain rangebound until the unemployment rate starts to rise. However, yields are now near the top-end of that trading range, making this a good entry point to initiate long duration…