Research Highlights

Last week we updated our outlook for the two biggest global economies, and both appear set for another year of solid growth, despite widespread economic pessimism in the marketplace, and expectations for much lower U.S. policy rates in 2024. Our China report highlighted that economic momentum will stay reasonably positive in 2024. However, unlike the……

A just-published report examined the outlook for global asset markets for 2024. The recent Goldilocks scenario may prevail in the near term, but the investment landscape is expected to become more difficult as the year and economic cycle progresses. It is premature to conclude that a bond bull market is underway. Bonds are unwinding oversold……

A just-published report examined the outlook for global fixed income markets and monetary policies for the coming year. Our expectations for 2023 panned out exceptionally well. We leaned aggressively against the entrenched consensus and called for no U.S. (or global) recession, still higher developed market policy rates and an eventual significant upside breakout in bond……

A just-published report updated our view on the U.S. economy, and highlighted key indicators which show that the economy continues to expand at a solid pace, supporting our view that a U.S. recession remains unlikely for the foreseeable future. Moreover, while inflation has continued to moderate, its underlying rate remains well above 3%. U.S. consumers……

A just-published report updated our investment strategy and examined some of the possible economic surprises ahead that might impact the DM rate-hiking cycle and widespread hopes for a bond bull market. One significant source of economic weakness in the past year has been the downturn in global trade, and the related weakness in manufacturing activity,……

A just-published report our investment strategy in the context of the surge in bond yields this year, and their more recent retreat.  Of the many arguments used to explain the surge in bond yields this year, in our view the most persuasive is that the market has embraced our long-held argument that the Fed’s 2.5%……

A just-published report updated our investment strategy and positioning in view of the recent spike in DM government bond yields to fresh highs for the decade. MRB has been a strident bond bear over the past 2+ years, but we are (finally!) leaning towards being buyers on bond price weakness, rather than shorting on strength…….

A just-published report provided a framework to determine the level at which DM interest rates could finally cause a global recession. The report identified some signposts to watch for along the way, and the relevant investment strategy during the endgame of the current tightening cycle. MRB’s frameworks use a broad concept of the cost of……

A just-published report examined the structural forces at work in the Treasury market, and the message was that there is more upside in yields over the long haul. Both cyclical and noncyclical factors have driven Treasury yields higher over the past six months. This includes a rise in the term premium, possibly due to a……

A just-published report addressed the major global investment issues, particularly last week’s surge in DM government bond yields. It is gradually sinking in with bond investors that DM central banks have not completed the tightening cycle, and rate-cut expectations for next year were far premature, and thus have been unwinding. The resilience of the U.S…….

A report published last week updated our views on Fed policy and the bond market outlook after last week’s FOMC meeting, and concluded that the Fed has finally started to acknowledge that the policy rate will follow a higher path over the coming years than it has been signaling. FOMC participants revised up their policy……

A just-released report updated our views on global financial markets, noting that a critical anchor on global bond yields over the past several decades was gradually lifting, namely Japanese bond yields. The head of the BoJ recently hinted that the end of negative policy rates is possible, perhaps by yearend. To this end, 2-year Japanese……

A recent report highlighted the central role played by household consumption in delivering sufficient economic momentum to meet the government’s growth target of 5% for 2023. In the absence of the traditional drivers of Chinese economic growth such as exports, housing and fixed asset investment, all the heavy lifting falls on the shoulders of the……

Last week we examined the outlook for the euro area economy and related asset markets. The economy has once again disappointed this year, as trade and manufacturing are caught in a global downturn, albeit one that looks to be nearing an end. However, the main disappointment this year has been the cautiousness of domestic consumers,……

A just-published report examined the key investment issues impacting global financial markets, and updated our investment strategy and recommendations. We remain more upbeat on global economic prospects than the consensus, and have consistently leaned against the tendency to worry about an approaching recession. Like the fabled Godot, a global recession never seems to arrive. A……

A just published report examined the outlook for the euro area after a bout of soggy economic data and recent mild disappointment in terms of asset market performance. The report examined the “hard” and “soft” (mostly sentiment gauges) economic data which have diverged significantly in the past year, and came to the non-consensus view that……

A just-published report updated our fixed-income recommendations and investment strategy. The main conclusion was that the strength of the global economic expansion and dearth of economic slack would prevent DM inflation from returning to the 2% inflation world of the 2010s. Thus, we remain cyclically bearish on bonds within a multi-asset portfolio. Central banks and……

A just-published report updated our multi-asset recommendations and investment strategy. One of the critical differences that we have had with the consensus is that we do not envision the Fed et al will start cutting rates just beyond the near term. Monetary conditions are not restrictive, underscoring that global financial markets will be at significant……

A just-published report outlined MRB’s framework for asset manias, and compared the current macro backdrop with the factors that have traditionally led to bubble episodes. For the first time in decades, there is now a consumer price inflation consequence of providing forceful monetary and fiscal stimulus. This has the potential to make the world much……

A just-published report addressed a number of timely investment issues, including the hardening in expectations that the Fed is now close to ending its rate-hiking cycle. The timing of this change was crucial, because G7 10-year government bond yields were on the verge of breaking out to new highs for the current rate-hiking cycle, creating a……

A just-published report updated our view on global financial markets and examined a number of timely investment issues. The U.K. pound was the focus in one section, and we re-iterated our underweight recommendation versus both the U.S. dollar and euro. The pound remains weighed down by structural drags and failed to benefit from the BoE’s……

A just-published report updated our view on global financial markets and the evolving expectations for monetary policy in the major developed economies. The widely anticipated interest rate easing cycle that was supposed to start this autumn, driven by weakening growth and much lower inflation, is on ever-shaky ground. The Fed et al have consistently underestimated……

A just-published report updated our long-run projections for all of the major global asset markets. The main conclusion was that real returns on global equities and G7 government bonds will be lower over the next 10 years than in recent decades. The extremely strong real returns of recent decades were first driven by the steady……

A just-published report updated our investment strategy in view of ongoing global economic resilience and the recent upward tilt to DM government bond yields. In particular, we examined the bearish economic signal from the inverted U.S. yield curve in the past year. Treasury bulls have cited the inversion of the U.S. yield curve as evidence……

Last week we published a two-part report on the outlook for the U.S. economy and related investment strategy. The reports debunked some of the arguments proposed by those in the recession camp, and examined the various leading indicators and their historical accuracy and, in many cases, flaws. A recession is inevitable at some point, but……

A recently-published report argued that there is little precedent for the global stock-to-bond (S/B) total return ratio to deviate directionally from bank stocks on a sustained basis. Indeed, even the divergence since early-2022 is an anomaly in recent decades. MRB believes the core U.S. and euro area elements of the global banking system are healthy,……

A recently-published report updated our views on the odds of recession for the U.S. economy, where economic prospects have been perceived to have taken a meaningful hit following the spike in U.S. banking sector stress in March. A timely policy response soothed investors’ fears regarding the banking sector’s health. Still, the elevated banking stress took……

A just-published report updated our view on the short- and long-term prospects for global financial markets, concluding that the choppy tactical risk-on phase was likely to persist, but in the context of a late-cycle bearish backdrop due to a maturing expansion and sticky DM underlying inflation. The report also addressed the issue of the sharp……

Our rotation theme from last year has panned out well with regards to investors reducing their U.S. exposure and embracing the euro and euro area equities. We expect further outperformance in the euro area, however, we also expect this theme to broaden this year, and to encompass EM assets as well. As just-published report concluded……

There has been a steady drumbeat of recession calls over the past year, yet the global economy has proven resilient. A just-published report updated our multi-asset recommendations, concluding that it is still prudent to be cyclically cautious because of the elevated level and stickiness of core inflation in the DM world. Nevertheless, a reprieve on……

A just-published report updated our fixed income recommendations and strategy. The report concluded that investors will have to get used to elevated bond market volatility, as fixed-income markets are likely to continue facing macro crosscurrents. The reason is that the global economic expansion has matured but is not over, yet rising bond yields keep snapping……

A just-published report examined the ongoing panic in the major banking systems, and concluded that regulators will ultimately do whatever it takes to restore confidence in their banking systems. Moreover, the Fed and some other central banks have already tempered their hawkish rhetoric, which should help to calm nerves. Nevertheless, sentiment relating to banks is……

A just-published report examined the timely topic of whether a full-blown banking crisis was taking hold and the implications for the global economic outlook and asset markets. The report concluded that investors were overreacting. The report noted: It is typical for blow-ups to occur when interest rates and bond yields rise meaningfully. The abrupt shift……

A just-published report examined three topical issues affecting U.S. bank shares, including the hot issue of the week regarding deposit risks, which have triggered fears that banks might have to sell assets. The failure of Silicon Valley Bank sent chilling memories of the Global Financial Crisis for many investors and prompted swift actions by the……

A just-published report updated our multi-asset portfolio recommendations, noting that the recent rise in G7 government bond yields was threatening to trigger another risk-off phase. Last year’s surge in bond yields crushed risk asset markets despite positive corporate earnings results. Higher bond yields in the past month has so far corresponded with only a slight……

A just-published report highlighted that the rally in equity markets since last autumn will be at risk if global bond yields continue to firm. Ominously, the short end of the U.S. and euro area yield curves have broken out, and 10-year German bond yields are on the verge of following. We have flagged these two……

A just-published report updated our view on the outlook for U.S. inflation, and concluded that recent CPI data is already signaling that there will be more persistence to inflation than the Fed and bond investors are currently discounting. The point about being unprepared for the persistence of more elevated inflation than in recent decades is……

A just-published report updated our absolute return portfolio, which remains positioned for risk-on from a tactical perspective. Investors are still generally confused about where we are in the economic and investment cycles. This confusion thus provides various investment opportunities, which was the focus of the report. Specifically, we do not foresee the global economy entering……

A just-published report updated our multi-asset recommendations, noting that while the risk-on phase should continue in the near run, the cycle is not over in terms of policy tightening. The global economy will prove more resilient than investors anticipate, although it exhibits late- rather than early-cycle characteristics that should temper investor enthusiasm on a 6-12……

A just-published report updated our view on the global investment outlook. The financial markets are gripped in a debate about whether and when the U.S. economy will succumb to a recession, and presumably drag the global economy down with it. We disagree with this view, and in fact are starting to see the green shoots……