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Europe

The BoE And The Path For Sterling

The change in the BoE’s tone has likely altered the path for sterling. In this report, we explore if the BoE’s lens for monetary policy is justified, and provide some targets for the pound.

Foreign Exchange Strategy by Chester Ntonifor
BoE: How Much More Tightening?
At 3.8%, the yield on 10-year UK Gilts is now back near where it was in early March. This marks a round-trip after the yield fell to as low as 3.3% in the weeks following the emergence of bank stress in the US and Europe. Meanwhile, both US and German 10-year…
Daily Insights
Deteriorating Investor Morale: A Warning For Eurozone Stocks
The rebound in European economic conditions that began at the end of 2022 has ended. On Monday, the Eurozone Sentix sent a pessimistic signal about investor confidence. The headline index fell from -8.7 to -13.7 in May – disappointing expectations of a…
Daily Insights
ECB: Focusing On Wages Is Misplaced
According to BCA Research’s European Investment Strategy service, the ECB is wading into policy-mistake territory because it is overemphasizing lagging indicators such as wages at the expense of leading indicators such as credit and money flows. European…
Daily Insights
The ECB’s Rearview Mirror

The ECB continues to focus on lagging indicators and risks once again to cause a policy error that unduly hurts European growth. What does it mean for investors?

European Investment Strategy, Global Fixed Income Strategy, Foreign Exchange Strategy
The ECB Is On A Journey
As anticipated, the ECB downshifted the pace of rate hikes on Thursday, delivering a 25bps increase. Moreover, the central bank announced that it “expects” to end APP reinvestments in July. President Christine Lagarde continued to characterize inflation as…
Daily Insights
What Will It Take For The NOK To Strengthen?
The Norwegian central bank’s 25bps policy rate hike on Thursday was in line with consensus expectations. The lack of a decisive peak in headline CPI inflation – which has been gyrating in the 5.9-7.5% range since mid-2022 – is keeping policymakers…
Daily Insights
CBAM: EU Emissions Evangelism

The initial phase of the EU’s ambitious CBAM will launch 1 October and will begin collecting a carbon tax in 2026. Between now and then, it will be challenged as it attempts to put a price tag on CO2 emissions as imports cross the EU border. The CBAM will impart an inflationary bias in EU commodity and goods markets as 2026 draws near and importers have to secure EU ETS credits, the number of which, by design, will contract over time.

Commodity & Energy Strategy
ECB Policy Is Biting
Results of the ECB’s Bank Lending Survey revealed a substantial tightening in credit standards for loans to firms and loans to households for house purchase in Q1. Higher perceptions of risk and lower risk tolerance are behind the tighter conditions and banks…
Daily Insights
Caveat Emptor (GeoRisk Update)

Macro and geopolitical risks may spoil the narrow window for a stock market rally before recessionary trends rise to the fore.

Geopolitical Strategy by Yushu Ma, Matt Gertken, Jesse Anak Kuri

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