Macro Economic Research
05
Aug
2015
Japan crumbles while BoJ fumbles


• Wages in June, the second largest bonus month of the year, were down 2.4%  
• Real consumer spending is stagnant, and export volume has fallen sharply  
• Aggressive QE by BoJ is producing little result: Q2 rea...

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04
Aug
2015
Currency Wars - 2016 end-game


• Cheap oil to benefit US & world over next 12 months
• Cheap euro stabilises Club Med, for now at least, but ...
• Cheap Germany compounds predatory Japanese Abenomics
• Dollar not yet too high, but China overvalue...

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04
Aug
2015
Turkey – clouds are gathering


• Souring (geo)politics weighing on the economy  
• The bar for a tighter monetary policy bias has moved lower  
• Fed lift-off set to coincide with escalating domestic macro challenges  
Konstantin...

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03
Aug
2015
US recovery to smooth Canada’s adjustment


• Weak oil prices push the economy into recession in H1  
• We expect growth to rebound in H2 as the impact of the US recovery kicks in  
• This will smooth the necessary adjustment as the commodity supercycle tu...

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Investment Strategy
29
Jul
2015
Duration attractive for now

Renewed commodities collapse in the wake of the relentless China slowdown is keeping duration attractive, helping our long-end rates exposures in the UK and Australia. The 10-year Gilt hit our 1.90 target earlier. We see scope for further d...

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22
Jul
2015
C/A and FX: should we care?

The answer is a qualified yes, but context is all. C/A surplus economies have excess savings and so a lower equilibrium interest rate, making their currencies natural funders for carry trades. So if you think it’s a good time for carr...

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20
Jul
2015
August 2015

With the euro having consolidated over the spring, a return of the balance-sheet trade looks likely. Last year, EUR/USD collapsed way ahead of the turn in the balance-sheet ratio. This was partly driven by the fact that despite tapering the...

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15
Jul
2015
Oil decline and the related trades

In line with our June Asset Allocation recommendation, crude oil has resumed its decline. We add risk exposures to reflect the impact of the latest decline – duration in Gilts and long equity positions in India and Turkey. In all case...

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