Macro Minutes

Market pricing for central bank policy rates has been on wild ride. Front-end yield spiked to extreme levels during the initial phase of the oil shock. They are lower now but in some countries painting a very different picture than before the war started. Policy responses will not be uniform across countries but some central banks might be inclined to move pre-emptively while others could wait a lot longer. In episode we discuss why hikes could occur by mid-year in the UK & Europe while the BoC and Fed will be more patient and hold the line.

• Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics
• Blake Gwinn (Desk Strategy), Head of US Rates Strategy
• Jason Daw (Desk Strategy), Head of North America Rates Strategy

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

In this European episode of Macro Minutes, Peter is joined by Marc Sanchez who is RBC’s Head of European Financials Sector Strategy and recently wrote a detailed note about the private credit market and the potential pitfalls. Marc and Peter recap why markets have recently become wary of private credit, explore where the problems might lie and what potential contagion channels into the public markets exist.

• Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics
• Marc Sanchez (Desk Strategy), Head of European Financials Sector Strategy

*Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

In this episode, we examine how the Middle East conflict transmits economic shocks beyond energy markets, focusing on supply chain disruptions in Asia-Pacific and global inflationary pressures. Join us when we explore why commodity exporters like Australia are feeling the pinch, how central banks will respond to stagflation, and why US equities have remained resilient , though caution is warranted as more significant market headwinds may be emerging.

• Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics
• Robert Thompson (Research), Australian Macro Rates Strategist
• Izaac Brook (Desk Strategy), US Rates Strategy
• Lori Calvasina (Research), Head of U.S. Equity Strategy

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

The episode examines the Iran conflict through an emerging markets lens, analyzing recent developments and exploring two primary scenarios that could unfold in the coming weeks. The first scenario envisions rapid de-escalation that would allow oil prices to retreat toward $80 per barrel, providing relief to EM economies and supporting risk assets. The second scenario contemplates further escalation, potentially including boots-on-the-ground military intervention, which would keep oil prices elevated for an extended period. This sustained pressure would create headwinds for EM growth, inflation dynamics, and external balances. We assess the implications of each path for emerging market currencies.

Participants:

• Luis Estrada(Desk Strategy), LATAM FX Strategist
• Daria Parkhomenko (Desk Strategy), FX Strategist
• Abbas Keshvani (Desk Strategy), Asia Macro Strategist

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

In this European edition of Macro Minutes, we discuss the rise in energy prices in the wake of the Middle East conflict brings back painful memories of the 2022 energy shock for Europe. We dissect what is similar and what is different, quantify some impacts on inflation and growth estimates, and map a path forward for the ECB and BoE.

1. Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics
2. Cathal Kennedy (Desk Strategy), Senior UK Economist
3. George Moran (Desk Strategy), European Macro Strategist

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

Concerns over the spending and investment circularity of the AI Ecosystem between chip makers, hyperscalers and data centers has shifted to a New Circularity, driving credit spreads wider. The New Circularity was initiated by new AI apps hitting software equity valuations and credit spreads, which in turn is feeding into concerns over vehicles exposed to that widening, namely the Broadly Syndicated loan market, the Private Credit market, BDCs and even Insurance Companies. Valuation declines have in turn driven redemption requests which has placed more pressure on credit spreads

1. Jason Mandel (Desk Strategy), Head of Leveraged Finance Desk Strategy
2. Jason Daw (Desk Strategy), Head of North America Rates Strategy
3. Steven Denny (Desk Strategy), Head of US IG Credit Strategy

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

The US Tariff framework is changing. China is preparing for its National People’s Congress. Latin America is entering a period of political volatility. We give our take on the current EM environment.

1. Richard Cochinos (Desk Strategy), FX Strategist
2. Abbas Keshvani (Desk Strategy), Asia Macro Strategist
3. Daria Parkhomenko (Desk Strategy), FX Strategist
4. Luis Estrada (Desk Strategy), LATAM FX Strategist

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

Over the past 6-12 months Treasury yields are rangebound, gold surged, but the USD has weakened. Despite the de-dollarization narrative, investors have continued to accumulate USD denominated assets, but with a cautious bias (i.e. hedging). To unpack these complexities you will hear insights from Blake Gwinn (Head of US Rates Strategy), Richard Cochinos (FX Strategy), and Chris Louney (Natural Gas and Gold Strategist).

1. Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics
2. Cathal Kennedy (Desk Strategy), Senior UK Economist
3. Megum Muhic (Desk Strategy), UK Rates Strategist

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

In the first episode of our new monthly ‘European Edition’ we talk about political instability in the UK and its impact on markets. Despite the uncertainties, we still see value in the short end of the UK Gilt curve, also versus the EUR market. We also outline that we see the ECB on hold for the rest of the year despite inflation being below the 2% target and why we think the EUR yield curve steepening is far from over.

1. Peter Schaffrik (Desk Strategy), Head of UK/European Rates & Economics
2. Cathal Kennedy (Desk Strategy), Senior UK Economist
3. Megum Muhic (Desk Strategy), UK Rates Strategist

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts

There seems to be a confluence of factors that have conspired to be the perfect storm for gold. Prices gains have been parabolic, the recent correction severe, but dip buyers arrived in force to support the market. Is there still a golden opportunity in the shiny metal?

1. Jason Daw (Desk Strategy), Head of North America Rates Strategy
2. Christopher Louney (Research), Gold & Natural Gas Strategist

* Research Analyst opinions are their published views, independent of those expressed by Desk Analysts