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The US labels China a currency manipulator

Shortly after the renminbi’s sharp depreciation on Monday, the US Treasury Department labelled China a currency manipulator. This is the first time in 25 years that the US government has designated a country as a currency manipulator. According to the US Treasury Department, the decision was triggered by the perceived lack of action by the PBoC to resist […]

Currency update – the Chinese renminbi

Following US President Donald Trump’s announcement of a new 10% tariff on USD300 billion of Chinese goods, the Chinese renminbi (rmb) weakened sharply and breached CNY7.00 per USD. The recent rmb move, in our view, represents a major shift in the People’s Bank of China’s (PBoC) currency policy, reflecting the deteriorating outlook for trade negotiations with the US and […]

BoJ stays put amid economic headwinds

At its monetary policy meeting on 30 July, the Bank of Japan (BoJ) decided to keep its monetary policy unchanged, as expected. The decision came as the Japanese economy faces strong external headwinds and a downbeat outlook for domestic demand. However, we do not expect the BoJ to make any changes to its current monetary easing framework until H1 […]

House View, August 2019

Asset allocation While dovish central banks have resulted in an impressive ‘everything rally’ this year, we now need to see an improvement in fundamentals, as 12-month forward earnings for global equities are still 2% below their highs of October 2018. We therefore remain generally cautious on equities, waiting for a correction before we increase exposure. […]

Weekly View – Powell throws in the towel

After a brief lull, Trump renewed escalating trade tensions with China by threatening new tariffs on USD 300bn of Chinese imports to the US. A global sell-off ensued and the Chinese authorities now appear less inclined to resist renminbi weakness relative to the dollar, having allowed the renminbi to break the CNY7/USD “psychological threshold”. Unsurprisingly, […]

US-China: Trump’s tariff net expands

US President Trump pre-announced a further expansion of the US tariffs on imports from China: the remaining half of imports not yet taxed will be at a rate of 10%. It was our central scenario that the tariff net would be increased before the 2020 elections, but we are surprised by the timing, so close on the heels […]


As expected and as telegraphed, the Fed cut rates by 25bps on 31 July – the first rate cut since December 2008 – and it ended prematurely its quantitative tightening programme (in August instead of September). Chairman Jerome Powell justified the rate cut as an “insurance” cut, i.e. to insure against the downside risks to […]

Data adds to the case for ECB action in September

The euro area economy grew by 0.2% q-o-q in Q2, down from 0.4% in Q1. While 0.2% is still a decent pace of growth, concerns about the economy in the second half of the year have increased. Recent data have shown that the industrial slump has started to leave some marks on the domestic economy. […]

Markets face a tug of war

The world economy and financial markets are being influenced by two opposing forces engaged in a tug of war. On one side are trade tensions and an ageing economic cycle, factors that are eroding business confidence and holding back corporate investment, raising questions about an impending recession. On the other are central banks, which are […]

Looking for evidence of SNB intervention

Data published on Monday revealed that commercial banks’ sight deposits at the Swiss National Bank (SNB) rose by CHF1.7bn last week (see chart), the largest weekly increase since May 2017. The amount suggests the SNB intervened in the FX market, probably ahead of the ECB’s meeting last Thursday. Weekly releases of commercial banks’ sight deposits […]

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