Will USD/JPY Finally Break?

USD/JPY has been frustratingly stable but our bias is to expect it to break lower: The BoJ kept policy on hold last week and gave no indication that it is about to increase its asset purchases. Valuations are stretched. Our PPP model says … [More.]

Low Potential?

One of the raging debates among economists and investors these days concerns the size of output gaps in the major developed economies. If output gaps are smaller than widely believed, central banks will need to tighten monetary policy earlier than … [More.]

U.S. Employment: Trust The Data

Today’s payroll report, combined with the ISM reports, suggests that the U.S economy is back on track after a weak start to the year. The labor data and ISM surveys paint a much more upbeat picture than other recent economic releases on the d … [More.]

Update On Gold

Gold prices remain trendless. Our Commodity strategists expect to maintain an underweight precious metals position within the commodity complex. The above chart shows that the key drivers of gold since 2008 - real interest rates, the dollar and … [More.]

A U.S. Recession Is Unlikely

The annualized 2.9% contraction in first quarter U.S. GDP was among the worst of the postwar era and the only one of its size that did not occur during a recession. But coincident and leading indicators suggest that a recession is highly … [More.]