FICC
One macro framework for rates, FX, credit, and commodities, helping investors connect cross-market signals and position with clarity and conviction.
Rate cuts, recession risks, and relative value. This report unpacks how the BoE, Riksbank, and Norges Bank are reacting to global trade turmoil and where the opportunities lie.
Taiwan, Singapore, and Korea's currencies might appreciate versus the USD, driven by capital repatriation from domestic private investors away from the US. This thesis is less pertinent to India, Indonesia, and the Philippines because they have large net foreign portfolio liabilities. Malaysia and Thailand fall in the middle, while China is an exception. Investors should play intensifying deflationary pressures in Asia by betting on lower interest rates in the region.
The Fed held rates steady this afternoon, and the timing of its next move will be dictated by whether the tariff shock to inflation is transitory or more long lasting.
We apply our systematic approach to investing based on economic, inflation, and monetary policy surprises to the major global bond markets. The economic regimes defined by the current macro-surprises setup confirm our existing fixed-income portfolio tactical recommendations.
Oil has borne the brunt of the year-to-date deterioration in cyclically sensitive financial assets. It is a key underperformer both within the commodity space and among global risk assets. This underperformance underscores that in addition to the trade war-induced headwind to demand, bearish supply-side developments are also weighing down on crude prices. As we discuss in this report, these dynamics will likely continue exerting downside pressure on oil prices over the coming weeks and months.
This week’s report looks at Japan, with the recent BoJ meeting. While a trade war has injected uncertainty into the Japanese economy, our conviction remains high that JGBs will underperform other government bond markets, and the yen will ultimately rally. That said, JPY is due for a tactical pullback.
This year’s corporate bond sell off has hit high-yield more than investment grade, and high-yield spreads have turned relatively more attractive as a result.
If Trump’s tariffs are ‘America's Brexit’, then UK gilts will recoup ten years of underperformance versus US T-bonds. Meanwhile, as the AI bubble fully deflates, Europe’s stock market valuation versus the US will rerate by about 25 percent. The big ‘currency’ winner of the structural exodus from the US dollar will be bitcoin. Plus: a trade for the next four weeks is to go tactically long USD/CHF.
US Treasuries typically outperform both equities and global government bonds during downturns. Recent political shifts could lessen that outperformance this cycle, but we doubt it will disappear completely.
