Views

The US-Venezuela agreement is strategically significant, in our view. But it is also unlikely to materially alter the oil-market outlook in the near term

Taken together, these constraints suggest that the agreement will not materially affect the balance between crude oil supply and demand in 2026.

Within US equities, we maintain a Neutral view on the energy sector. After strong year-to-date performance linked to rising crude prices and strong refining margins, we expect the sector to perform more in line with the broader market.

Within the sector, we favor selective exposure to oilfield services, which should benefit from rising international spending over the next several years.

However, a sustained monthly core inflation rate closer to 0.3%, or broader second-round effects from earlier supply shocks, would increase the risk of further tightening.

We maintain our Attractive rating on Japanese equities and favor balanced exposure across AI, cyclical, and structural beneficiaries.

However, it is important to emphasize the government’s effort to cut spending by about 1.3% of GDP, which is equivalent to past fiscal reforms.

However, the fiscal deficits for both 2026 and 2027 are really large, and debt-to- GDP will probably increase, mainly in 2027, from around 61% of GDP now.

While they rebounded after their Iran war ceasefire negotiations began, flows of bonds and equities have recently decreased, particularly with equity flows experiencing a sharp fall.

That ambiguity is deliberate as Warsh rejects a mechanical Taylor rule and believes an explicit rate path would recreate the shortcomings of forward guidance. Investors therefore received a clearer assessment of the current state of play, but not the predictable reaction function many wanted.

In 2025, France had the second largest public spending in the euro area after Finland, at 57.3% of GDP.

Our analysis of spending by category based on 2024 COFOG data reveals that healthcare and social protection are the primary drivers of the public expenditure gap between France and other major European economies.

Over the 2010 – 2024 period, pension expenditure averaged 13.4% of GDP in France, compared to 10.7% in the Eurozone and 9.3% in Germany.

While the government has targeted a public deficit of 5.0% for 2026, this goal remains ambitious.

Undoubtedly, the fiscal burden of public expenditure — and of the social security system in particular — will take center stage in the upcoming French presidential election.

Polymarket and Kalshi continue to indicate that the probability that Lula wins is around 60%.

The figures show a 7.1% year-on-year increase in gross average earnings in June 2026. This represents a huge slowdown compared with the previous month and is the lowest figure since 2021 (excluding the dip in 2023 caused by the base effect of the one-off bonus for armed forces).

The latest June data has not altered our overall outlook, so we are still expecting annual average wage growth of around 9-10% for 2026 as a whole.

Rather than the double-digit growth previously seen, the increase in June was just 5%. As salaries have been significantly cut in many areas for public servants, a further slowdown is expected here in the coming months.

These include the strong foreign equity inflows into the US

For example, if the 7th AP Fund (a Swedish pension fund) decides to currency-hedge some of its foreign assets, this would ─ all else being equal ─ lead to an inflow of SEK 300-400bn and thus a stronger krona.

The US dollar’s ten-year appreciation trend. The dollar normally moves in long cycles. The volume of US fixed income and equity markets has attracted both private and public capital to the USD.

We presume Warsh will do his utmost to avoid upsetting the bond market today – perhaps by avoiding monetary policy altogether – and see DXY trading in a quiet 99.00-99.30 range.

A 1.1620-1.1665 range is possible if Warsh avoids rattling the bond market and conditions remain calm.

There is an outside risk to 1350, but USD/KRW has come a long way in a short space of time and is probably due some consolidation.

If somehow a hawkish read emerges, then the dollar can advance against the low-yielders of CHF and JPY.

The Korean won continues its advance. The driver this week has been back-to-back rate hikes from the Bank of Korea, with the policy rate now a reasonably high 3.00%.

But with 12% implied yields through the forwards and the chance of a regime change, we suspect the real can continue to comfortably outperform the steep forward curve.

Agentforce and Data 360 annual recurring revenue (ARR) reached nearly 3.9 billion USD, up more than 210%.

AI products generated more than 25% of new annual contract value, while more than 5,500 customers now use at least one Workday agent.

Its software sits inside project workflows, giving AI access to rich technical context.

The immediate reaction was a flattening of the Treasury yield curve, with a meaningful tick up in short-term yields.

The yield curve has come out of this flatter from both ends. The front end has been hurt (2yr yield), while the back end has been comforted (30yr yield a tad down).

The increase has been most pronounced at the short end of the yield curve

First, a US-style 30-year mortgage that is both fixed-rate and cheap to refinance is unlikely to become the norm in Australia.

For households, the main incentive comes from the tax system. For owner-occupiers at least, mortgage interest is not tax deductible, unlike in the US.

The US model of 30-year fixed rate mortgages that are cheap to refinance is unlikely to be replicated in Australia.

At 94.5, up from 94.2 in July, it has recovered to its highest level since the US strike on Iran

When you look at surveys of consumer sentiment and broader measures it is clear that consumers are feeling uneasy amongst all this change.

A broad allocation to commodities can provide an additional source of long-term returns and potentially help protect portfolios during periods when rising inflation expectations challenge both equities and bonds.

In this edition of Investment Outlook, we have increased our risk allocation.

Its Falcon Flex ARR exceeded 2.29 billion USD, up 101%, suggesting customers increasingly want a broader security platform.

Subscription ARR rose 33% to 1.66 billion USD, while its strategy increasingly includes securing AI-agent activity.

The economy has now accumulated six consecutive rolling quarters of employment destruction, with adverse weather conditions recorded in July further exacerbating an already weakened labour market.

Current U.S. tariffs and counter Canadian tariffs are not yet large enough to derail the Canadian economy’s recovery

Yet markets are still pricing at least two more hikes from both the ECB and the Bank of England.

That said, he has done enough today to validate the market discount that had been biased in the direction of a rate hike risk to begin with. That discount has hardened.

It surprised modestly to the upside on both a headline (1.0%/3.5%yr) and trimmed mean basis (0.5%/3.6%yr).

Construction activity disappointed, a 2.1% decline in Q2 bringing annual growth down to 2.1%yr. Most of the decline was driven by the mining sector following the completion of a large mining infrastructure installation in WA earlier in the year.

US GDP growth was unrevised in Q2’s second estimate at 1.5% annualised. In the detail, household consumption was revised up a touch (3.2% to 3.4% annualised) but offset by marginal downward revisions to business investment and government spending, as well as a larger drag from net exports.