Fiscal Policy - Indonesia's budget-deficit cap, a cornerstone of its fiscal policy for decades, may now impede economic growth [1] Economic Outlook - A key technocrat who played a role in rebuilding Indonesia's economy post-Asian financial crisis expresses concern [1]

Market Overview - Asian markets showed mixed results following a phone call between US President Donald Trump and Chinese President Xi Jinping, with low expectations for concrete agreements on tariffs and technology supply chains [2][8] - Hong Kong's Hang Seng Index remained largely unchanged, while mainland China's CSI 300 saw a marginal gain, and the Shanghai Composite Index recorded a slight loss [3] - Japanese markets ended lower, influenced by a firmer yen, and the US faces a critical September 30th deadline to pass a funding bill, which could introduce further volatility [3] Japan's Bond Market - Japan's 30-year government bond yield climbed to 3.18%, an increase of 3 basis points, amidst rising yields reaching multi-decade highs [4] - The increase in yields is attributed to investor concerns over Japan's fiscal policy ahead of Senate elections and the nation's high debt-to-GDP ratio [4] - The Bank of Japan's decision to abandon Yield Curve Control in 2024 and reduce JGB purchases has allowed market forces to drive yields higher, posing challenges for carry traders [5] EUR/USD Currency Pair - The EUR/USD currency pair experienced a notable drop, falling below the 1.1750 mark, primarily driven by a strengthening US Dollar following the Federal Reserve's cautious rate cut outlook [6][8] - The European Central Bank maintained its key interest rates, but concerns over political turmoil in France and a recent credit rating downgrade by Fitch have weighed on the Euro [7] Ukraine's Defense Strategy - Ukrainian forces are rapidly integrating robotic units into frontline brigades to enhance operations and protect soldiers, aiming to gain a tactical advantage [9] - Plans include deploying 15,000 unmanned systems by 2025, with a focus on domestic production to develop a modern army [10] - The initiative has already shown results, with reports of successful robot-only assaults conducted in Kharkiv Oblast [10]

Central Bank Role - Central bank independence was a narrative [1] - Central banks primarily finance the state [1] - Fiscal and monetary policy are inseparable [1] Historical Context - The shift occurred after the 1970s, following the abandonment of the gold standard [1]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Global Macro Outlook**, focusing on **US Rates**, **International Rates**, **Commodities**, **Currencies**, and **Emerging Markets** [3][4][8]. Core Insights and Arguments US Rates - Risks to the front end of the yield curve are biased lower due to labor market weakness, while concerns about Fed independence are pushing long-end rates higher [3][15]. - The first Fed cut is projected for **September 2025**, with expectations of **four sequential cuts**, bringing the funds rate target range to **3.25-3.5%** by **1Q26** [12][11]. - Anticipated **2-year Treasury yields** are expected to reach **3.50%** and **10-year yields** to **4.20%** by the end of **2025** [12][11]. International Rates - Developed market (DM) curves have steepened, particularly in the US, amid renewed focus on the long end of the curve [4][36]. - The European policy easing is losing momentum, impacting the overall yield curve dynamics [36]. Commodities - The oil market is expected to face a significant surplus, with price forecasts remaining unchanged for now due to uncertainties surrounding China's stock build [8][88]. - The European natural gas market is entering winter with historically low storage levels, leading to a bullish stance for **4Q25** and a price target of **42 EUR/MWh** [8][93]. - Copper prices are anticipated to face bearish pressure, potentially dropping to **$9,000/mt** due to unwinding demand from the US and China [8]. Currencies - The US dollar has not weakened despite recent yield curve steepening, attributed to domestic growth factors [56][58]. - Concerns regarding Fed independence and fiscal excesses are influencing the dollar's performance, with expectations of a bearish outlook [58][63]. - Fiscal policy is expected to be a key differentiator for FX, with the hypothesis that fiscal easing supports currencies in low-debt countries [63][59]. Emerging Markets - The resilience of global growth and downside risks in the US are supporting emerging market (EM) local markets [8]. - A recommendation to stay overweight (OW) in EM FX and local rates, while maintaining a market weight (MW) in EM corporates and underweight (UW) in EM sovereigns [8]. Additional Important Insights - The US Treasury is well-funded through **FY25**, but a significant funding gap is expected to emerge in **FY26**, prompting coupon auction size increases starting in **May 2026** [19][22]. - The passage of the **OBBBA** is projected to lead to a surge in T-bill issuance, with an estimated **$529 billion** of net T-bill issuance expected in the current quarter [25][23]. - Demand from foreign investors remains weak, with expectations of a shift towards more price-insensitive demand in the Treasury market [29][31]. This summary encapsulates the critical insights and projections discussed during the conference call, providing a comprehensive overview of the current macroeconomic landscape and its implications for various markets.

try to put together, Phil, uh what 23rd record high for the S&P this year. What are are you thinking about valuations more or is it more about the the potential that names like Oracle are handing us. Yeah, and I think a lot of it has to do, Carl, with the fact that a lot of the things that people were worried about this year that may have kept valuations lower are kind of fading away a little bit here.So, last December 18th, we were here, Federal Reserve told us that they would cut rates twice in 2025. Nine ...

Core Viewpoint - France's borrowing costs have surpassed Italy's for the first time in euro zone history, indicating a significant shift in investor sentiment regarding fiscal policies in the region [1] Group 1: Market Dynamics - The recent change in borrowing costs is attributed to technical reasons, specifically the maturity of the underlying bond used for benchmark French 10-year yields being slightly later than that of Italy [1] - The convergence trend between French and Italian debt has been developing over several years, highlighting a long-term shift in the bond markets of the euro zone [1] Group 2: Economic Insights - Kallum Pickering, Chief Economist at Peel Hunt, emphasizes that there is a broader issue concerning debt burdens in large economies, with the UK being particularly vulnerable compared to other nations [1]

Summary of India Macro Outlook Post 50% Tariff, GST 2.0 & Strong GDP Data Industry Overview - **Industry**: Indian Economy - **Report Date**: September 4, 2025 - **Research Provider**: Deutsche Bank Key Points Economic Growth - Real GDP growth for April-June 2025 has exceeded expectations, but risks remain high for the second half of FY26 due to a 50% tariff shock [5][6] - Nominal GDP growth is projected to decline from 14.0% in FY23 to 12.0% in FY24, and further to 9.8% in FY25, with expectations of 9.0% or lower in FY26 [6][11] - The importance of nominal GDP growth is emphasized, as it affects corporate earnings, fiscal ratios, and debt dynamics [6] Inflation Trends - August CPI inflation is forecasted to rise to 2.23% YoY from 1.55% in July, with expectations of remaining subdued in the near term [7] - CPI inflation is projected to average 3.0% in FY26 and 4.5% in FY27, with a potential rise to 5.1% in April-June 2026 [8][9] - Core CPI inflation is expected to increase to an average of 4.4% in FY26, up from 3.5% in FY25 [9] Fiscal Outlook - GST 2.0 is expected to be fiscally sustainable, with higher consumption offsetting revenue shortfalls [10] - A revenue shortfall of INR 400-500 billion is anticipated in FY26, pushing the fiscal deficit to 4.50% of GDP [10][11] - FY26 GST collection is estimated at INR 11.8 trillion, a 10.9% YoY increase, but risks remain for lower tax collections due to moderating nominal GDP growth [11] Monetary Policy - The Reserve Bank of India (RBI) is expected to cut rates by 25bps on October 1, 2025, in response to growth risks [12] - The RBI's previous rate cuts have occurred despite positive GDP growth surprises, indicating a cautious approach to monetary policy [12] Currency and Foreign Exchange - The Indian Rupee is expected to depreciate mildly, with a target of 88.0 against the USD by the end of December 2025 [13] - India's FX reserves stand at USD 690 billion, but net reserves are lower at USD 635 billion, indicating potential vulnerabilities [14] Additional Insights - India's International Investment Position (IIP) is negative, with liabilities exceeding assets, highlighting the need for building FX reserves [14] - The report emphasizes the importance of qualitative assessments of GDP growth figures, particularly in light of deflator impacts [6] Financial Projections - The report includes a detailed financial forecast for various economic indicators, including GDP growth, fiscal deficit, CPI inflation, and trade balance [15] This summary encapsulates the critical insights from the Deutsche Bank report on India's macroeconomic outlook, focusing on growth, inflation, fiscal policy, and currency dynamics.

Economic Outlook - Chinese fiscal and monetary policymakers held a rare meeting, leading to speculation about potential easing measures [1] - The anticipated easing measures are expected to support both the bond market and overall economic growth in the current year [1]

Summary of Deutsche Bank Group Research on Japan Economic Perspectives Industry/Company Involved - **Industry**: Japanese Economy - **Company**: Deutsche Bank Group Key Points and Arguments Economic Growth Forecasts - The growth forecast for fiscal 2025 has been revised upward from 0.6% to 1.0% based on 2Q 2025 GDP figures, which showed a real GDP growth rate of 1.0% saar, exceeding market consensus of 0.3% [4][5] - The forecast for fiscal 2026 has been revised downward from 1.1% to 0.9% [4][5] - Growth forecasts continue to exceed consensus estimates [5] Tariff Negotiations and Economic Impact - Reciprocal tariffs with the US will be raised to 15%, while tariffs on automobiles will be lowered [4][9] - The impact of the US tariff increase on the real economy has been limited so far, with no significant change in export volumes to the US [10] - The expected impact on growth rates due to tariff changes is -0.1% for fiscal 2025 and 2026 [9] Inflation and Consumption Trends - Despite high inflation, real private consumption is on a moderate upward trend, primarily due to increases in real employee compensation [15] - Real employee compensation remains below pre-pandemic levels, with a significant negative real wage gap of about -4% in 2Q 2025 [15][23] - Inflation is expected to decelerate moderately but is unlikely to fall significantly below 2% [23] Monetary Policy Outlook - No significant changes in the Bank of Japan's (BoJ) stance on interest rate hikes are expected unless Takaichi becomes prime minister [4][46] - An interest rate hike is anticipated in October, influenced by the political calendar and economic measures [46][47] Political Landscape and Future Cooperation - The political situation will be influenced by the outcome of the Liberal Democratic Party (LDP) presidential election, with potential cooperation with opposition parties depending on the outcome [38][42] - If Prime Minister Ishiba remains in office, cooperation with the Japan Innovation Party (Ishin) or the Constitutional Democratic Party (CDP) is likely [38][42] Fiscal Policy Uncertainty - High uncertainty exists regarding future economic measures, with a placeholder assumption of a supplementary budget of about 15 trillion yen [34] - Further increases in defense spending sought by the US government are not reflected in the current economic outlook [34] Employment and Wage Dynamics - The number of employees has increased at an annual rate of about 0.7-0.8%, contributing to the rise in real employee compensation [15] - Nominal wage increases of at least 3% are deemed necessary to address the negative real wage gap [15] Long-term Economic Policy Trends - The long-term trend in economic policy is shifting from monetary policy to fiscal policy, focusing more on household-oriented policies rather than corporate-oriented ones [45][42] Other Important Content - The presence of a Liberal Democratic Party presidential election will significantly influence future political cooperation and economic policy direction [38][42] - The economic measures and their scale will be critical in shaping the economic outlook, with potential implications for fiscal policy and public sentiment regarding inflation and consumption [34][23]

Policy Stance - Labour pledges to end the use of hotels for asylum-seekers by 2029 [1] Fiscal Implications - There is a robust fiscal case for ending the use of hotels for asylum-seekers [1]