FICC
| Bonds
Bond market analysis on where to position across government bonds, credit, and inflation-linked debt.
The Fed will keep rates on hold until the unemployment rate forces its hand.
The Bank of Canada continues to hold its policy rate amid trade uncertainty and shows little concern about the potential economic damage from tariffs. We judge the risks differently and view a bet on more rate cuts this year as attractive.
Consensus sees one final ECB cut; we argue two are coming as deflationary forces are building in Europe. Dive in for the trade map: falling Bund yields, tighter peripheral spreads, and a euro primed for a 2026 rebound.
Jay Powell won’t be removed as Fed Chair before the expiry of his term next May, but we will learn the identity of his replacement this year, setting up a potentially awkward “shadow Fed Chair” situation.
We discuss the implications of this morning’s CPI report and the relative attractiveness of 2/5 Treasury curve steepeners.
Disinflation continues to unfold globally, and markets are finally catching up. Inflation expectations have broadly realigned with fundamentals, prompting us to shift our global ILB allocation to neutral. While tariff risks are inflating US expectations, pricing in the UK, Japan, and Australia has adjusted sharply. Today’s Strategy Report reviews these developments and updates our country-level ILB positioning.
Markets are pricing a return to a neutral policy stance for the major central banks within the next 12 months. However, recession risks still loom amid slowing growth. We unpack where recession risks are underappreciated and what it means for bond positioning.
Volatility is back in UST/Bund spreads. We unpack what’s driving the moves and explain what we are watching for tactical opportunities in the UST/Bund spread.