Developed Markets

Triple i Advisors

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CrossBorder Capital

Digging deeper into the data, Michael Howell comments that there has been some improvement in central bank liquidity growth thanks largely to the PBoC, ebbing bond volatility, and a faltering USD. These are liquidity-positive, but ongoing QT among other major central banks – including the Fed despite this week’s better numbers and weakening bond markets are liquidity-negative. Global liquidity growth has dipped to +8.1% in 3m annualised terms. A continued slide in liquidity through the rest of Q2 will put pressure on risk assets and liquidity-sensitive cryptocurrencies in Q3. For now, risk asset markets and cryptocurrencies are being supported by the Q1 liquidity upturn, which saw global liquidity expand by over US$5trn. A typical liquidity cycle lasts 5-6 years trough-to-trough, and although Michael originally expected the current cycle to peak in Q4, the downside risks to economic growth and easing central banks will see the cycle peak in early 2026 instead.

ABCG Research

ABCG Research’s previous forecast of a range-bound movement in EUR/USD played out accurately, as the pair rebounded from the 1.11 level and currently trades around 1.135. The recent PMI data showed mixed signals, but Taha Bin Sohail points out that the manufacturing sector is on an improving trajectory and the dip in the services sector is not a cause of alarm but rather a temporary recalibration. Although trade tensions with the US have resurfaced, Taha believes Europe will not allow this to derail its progress. A diplomatic resolution on tariffs remains possible, which will see the USD gain strength and pressure the euro in the short term. If tariffs are imposed soon, the Eurozone may see a negative economic impact. In light of this, Taha has revised his long-term EUR/USD outlook, expecting the upside to be capped below 1.15.

Bondcritic

Warut Promboon follows up on his latest report, discussing where the US is towards the unintended recession and where in EM the Trump tariffs will impact the most. In his last report, he reiterated his recommendation to stay on short-dated bonds in addition to precious metals. Since, Moody’s, Fitch and S&P all downgraded the US, which Warut views as spread neutral, since he believes Moody’s simply took the opportunity on the tariff news to move their rating in line with other agencies. Warut sees the US in a stagflation period. Though rising rates are not friendly to fixed rate bonds, he believes Asian high-yield bonds remain a good place to park capital in the near term on their resilience and attractiveness compared to the US high-yield counterpart (see chart). Prefer short duration under 5 years to keep duration low in preparation for an upward pressure on rates in the near term.

David Woo Unbound

David Woo expects Trump to cajole countries that he thinks are being slow to negotiate deals, with Mexico expected to be the first in line, so arguably they are the slowest relative to expectations at this point. Despite this, the Peso has put in a 5-wave rally since April 2nd. Over the past couple of weeks, the 5th wave has formed an ending diagonal triangle, which signals that a corrective rally is imminent. Another source of volatility for markets are senate negotiations over the reconciliation bill. This would initially be felt in the long end of the rates curve, but David expects any dollar weakness to be countered both by a sell-off in risky assets. For their part, Mexico has reaffirmed that they will continue to ease policy regardless of what the Fed does. The local activity outlook is gloomy. Buy USD/MXN.

Aitken Advisors

Starting this year, Japanese life insurance companies have a new accounting regime requiring them to set aside more capital for any asset-liability mismatches. James Aitken points out that the problem is that the lifers prepared for this change on the assumption that the 2020-22 type JGB curve would last forever, but instead they now have little to no ability to buy the long end of the JGB curve. This may surprise many who would expect Team Japan to be a buyer if rates ever went up. If Japanese real money is selling long-dated JGBs, who is buying? James says global fund managers. The flip side of it being too expensive for Japanese investors to invest in USTs fully FX-hedged is that it must be attractive for global funds to invest in JGBs, then hedge back into dollars. The yield on the package of long 30-year JGB swapped back into dollars is ~7.25%, which is more than the US long bond at ~5.05%.

Underlying Inflation

Riccardo Trezzi’s models suggest that Japan is experiencing a persistent inflationary trend, around the BoJ’s 2% target. Riccardo estimates that in April, the BoJ’s core index (excluding fresh food) rose 6.7% MoM SAAR (see chart). As for the other two core inflation measures, the index excluding fresh food and energy (core-core) increased 2.2% MoM SAAR, while the index excluding both food and energy (US-style core) rose 1.6% MoM SAAR. Given potential seasonal adjustment distortions, Riccardo continues to emphasize looking at NSA levels, which suggest that price pressures remain persistent and even higher than last year. His models remain well above the BoJ’s forecasts for core-core in FY2025 and FY2026, with the central bank’s current forecast implying an unrealistic average MoM of less than 10bps sa for core-core this year.

Emerging Markets

Talking Heads Macro

Manoj Pradhan sees stronger fundamentals in EMFX than the Euro area. Right now, when it comes to the g – r equation, the euro area and China are the ones boosting g while their central banks are already pushing r lower – that’s the opposite of the US. By the time the US slowdown is evident, other economies are usually just about beginning to scramble and think about a response. Not this time. China’s fiscal drive since Sep ’24 and its strong bargaining position in tariff talks has underpinned EM. Mexico, Brazil, India and South Africa have all raised policy rates more than fundamentals required. South Africa, India, China and Mexico (in that order) all have a cyclical and structural alpha to offer. In FX, Manoj recommends going long MXN/CHF (carry+) and EMFX basket (MXN, INR, ZAR, BRL) vs USD. For equities, go long China, India – both flat – and MDAX.

Grey Investment

The Chinese Yuan (USD/CNY7.3040) has been in a large consolidation for 30-months. A potential Ascending Triangle is forming. The AT is a bullish pattern (bullish for the USD in this case), with flat highs and rising lows. A breakout would target USD/CNY8.10+. The potential pattern would be invalidated by a break below 6.6968. Most FX rates Chris Roberts follows show potential for further gains against the USD OR potential setups for gains against the USD; thus, the CNY is a bit of an outlier here.

East Asia Econ

Chinese corporate profitability remains weak. Leading indicators for a recovery would be a rise in PPI and an improvement in business sentiment, but neither is visible yet. Indeed, the rate of PPI deflation may actually be decelerating. The weakest sectors are upstream, which Paul says is reassuring, in a sense. At an aggregate level, downstream industries are doing somewhat better, but only in a relative sense. As a trend, overall profits haven’t declined in recent years, but they haven’t risen either. April data were stronger, but without being able to identify a turn for the better in the economy to explain that rise, Paul assumes it is just simply noise.

Verisk Maplecroft

For all the uncertainty about the re-orientation of international trade and supply chains, Asia remains a critical region for global capital investors across every asset class. While the focus on India in recent weeks has been geopolitical, the Verisk Maplecroft team have been keeping a close eye on local market trends. The outlook remains positive, with real GDP growth forecast at 6% y-o-y despite considerable external headwinds, and an improving fiscal image. Tax reforms remain supportive of the business environment, and although public debt remains high-ish, rating agencies are relatively sanguine on the BBB rating. The team remain positive on the country’s strategic opportunity in global sourcing, allowing it to capitalise on the current wave of global trade tensions – as Chinese exporters are priced out of the market, India presents a compelling alternative. Bottlenecks have hindered progress, but significant strides have been made at a subnational level. Investors should watch closely.

Emerging Advisors Group

Jonathan Anderson points out that Indonesia is back in recessionary territory. Exports are ok, but nothing more, and domestic indicators have weakened again in most areas leaving his rough proxy growth index barely in positive territory. The good news is that Indonesia has relatively clean balance sheets at the macro level, with low public debt levels, no external deficits and well-behaved domestic leverage indicators. There is also more room to ease policy. Inflation is running near record-low levels, real interest rates are near record highs, and BI has been cautious on the easing cycle. With the rupiah supported in coming quarters, there is further room for policy stimulus ahead. Nonetheless, with listed earnings flat and lacklustre growth momentum, Jonathan still doesn't see Indonesia as an equity outperformer. Meanwhile, the combination of a stable rupiah, high real rates and a gradual easing cycle keeps Jonathan in IDR carry and local debt.

Krutham (formerly known as Intellidex)

The SARB’s recent rate cut, while long anticipated, marks a shift in tone as risks are now seen as balanced and a 3% inflation target scenario was introduced, suggesting a preference for anchoring inflation at the lower end of the target range. However, Peter Montalto finds this scenario implausible, since it assumes a smooth and immediate re-anchoring of inflation with little macro cost. Despite lower CPI and growth forecasts, the baseline suggests a gradual rate path with the QPM-implied repo rate dropping to 6.93% by end-2025. A July cut is seen as 40% likely, with future moves dependent on global conditions and SARB communication. The next MPC meetings are set for July, Sept and Nov, with cuts unlikely beyond July without further data shifts. Peter sees the official target only being changed next year.

ESG

Sustainable Market Strategies

Renewable energy technologies may be entering the most exciting phase of the S-curve when it comes to aggressive gains in market share relative to incumbent fossil fuel sources. Just like mobile phone subscriptions (see chart), the S-curve demonstrates that investors must think about timing instead of assuming liner growth in order to obtain the best returns. EV sales in countries like Norway have already reached the end of their curve, and fossil fuels such as coal are seeing an inverted S-curve at play. Fossil fuel equities may be living on borrowed time (chart 2), and investors that have not yet diversified away from conventional energy assets should do so before the next wave of imminent write downs of stranded assets begins. The window is closing rapidly; act quickly.

Commodities

10x Research

Markus Thielen points out that when Bitcoin loses momentum and falls below the upper Bollinger Band, defined as two standard deviations above the moving average, after being above it before, it often signals an early warning of impending consolidation. A close below this upper band typically reflects weakening bullish pressure and has historically preceded sideways or corrective price action periods. Bitcoin’s short-term uptrend is at risk if it fails to hold above $106,000 and $104,012, which are both key profit-taking thresholds. The rally has been steep and largely uninterrupted, driven by easing tariff-related risks, but all three daily reversal indicators have turned bearish, suggesting fading momentum and increasing the chances of a near-term correction.

CPM Group

Since the release of the 2024 Silver Yearbook, the silver market has seen prices rise sharply to record levels and then decline significantly, only to rise again in the first quarter of 2025, and fall again in April. CPM forecasted both the increase, decline, and further rise of silver’s price. The presentation below gives a small taste of CPM Group’s view of the opaque silver market. The 2025 Silver Yearbook is required reading for anyone hoping to get a leg up in this market, please get in touch to find out more.
Click here to watch the presentation.

Navigate Commodities

For now, volatility in China-centric industrial metals futures will be dictated by tit-for-tat trade measures and heightened risks of a global recession. That said, Atilla Widnell explains that inflation should also serve to push marginal cost iron ore producers higher up the cost curve; raising the cost floor and support for iron ore prices. At the same time, the seasonal expansion in Australian and Brazilian iron ore shipments should also serve to create a cap on prices throughout Q2. The great unknown is whether Chinese authorities will enforce government-mandated steel capacity reductions. If global trade measures remain in-situ, Atilla believes this increases the prospect of Chinese authorities revisiting expansive fiscal & monetary stimulus to defend the domestic economy. He maintains his medium-term outlook to US$95.70–107.84/t CFR China for Q2 2025. His short-term target is updated to US$94.12-95.62/t CFR China due to a potential stronger sell-off of ferrous metals markets and expanding arrivals of iron ore cargoes in Chinese waters.

Global Mining Research

Back in 2023, David Radclyffe notes the rapid demand growth outlook in the market and the surging supply. Such is the Law of Small Commodity Markets, leading to massive surges or declines in supply & demand, and resulting price swings that are nothing short of spectacular. In 2023 the GMR team showed that with any upset via delayed new mine starts, or of EV production being weaker than expected, the Law of Small Commodity Markets would apply – the bottom right chart created two year ago had forecasted today’s outcomes. To corroborate this, many groups are revising market expectations, with some expecting a surplus into the 2030s. Traditionally, with prices deep into the cost curve, projects would be deferred. But this is lithium! New projects are continuing with debt and equity readily available. The market remains good for lithium consumers, battery or auto makers, and bad for miners. The bumpy ride will continue, hold on tight.