FICC

Europe’s deflation problem is getting harder to ignore. This week’s ECB cut is just the beginning — tariffs, the euro’s rally, and softening demand all point to more easing ahead. We explain what it means for yields, equities, and EUR/USD.

Fed Chair Jay Powell’s remarks yesterday were in-line with our base case expectation that the Fed will not cut rates proactively in the face of rising tariff-driven inflation.

Commodities have not been spared the wrath of the post-"Liberation Day" selloff. However, in the sea of red, gold continues to shine bright, climbing to a fresh record high. How much further does the recent price action have left to run? We explore technical indicators to gauge the likely price outlook for gold, oil, and copper over the coming months.

Special Report

This week, we look at the sustainability of the HKD peg as the next whale to move markets, given what is happening to tariffs. After careful analysis, our bias is that it is here to stay. With the DXY dipping below 100, we are likely to see a rebound, which is actually bad news for the Hong Kong region of China, since it will tighten financial conditions. We have no new short-term trades, but if the peg broke, you want to be short HKD/JPY.

The combination of dollar weakness and rising US yields suggests global investors are questioning the safe-haven status of US Treasuries.

Our Portfolio Allocation Summary for April 2025.

Today, we publish our Quarterly Model Bond Portfolio report. We discuss how the trade war has further increased the global recession risk, but US Treasuries could underperform their global peers in the near term. We cover the fixed income investment implications in the short run and which bond markets are poised to outperform in a severe economic downturn.

Commodity prices are succumbing to the risk-off environment triggered by President Trump’s reciprocal tariff announcement. The latest events and market moves raise several important questions about the outlook for commodity markets. In this Strategy Report we address some of the most pressing questions raised during our recent discussions.

This report looks at the FX implications of the Trump tariffs, and the review of our Q1 trades.

The March employment report showed strong job growth, but the labor market remains in a fragile state and the demand shock from tariffs could be the catalyst that tips it over the edge into recession.