We revise our baseline EUR-USD forecast, reflecting expectations of further USD weakness, by changing our end-2025 EUR-USD forecast to 1.20 (from 1.17), and end- 2026 to 1.25 (from 1.20). We do not make direct changes to other G10 FX forecasts. Accessible version World at a Glance Further Dollar Downside Key forecasts in FX, rates and commodities Amid growing concerns around stagflationary risks, we raise our EUR-USD forecast profile, as we are looking for additional USD softening. Since last month, we also ...

Short-Term Market Outlook - The market was surprised by the resilience of global stocks, particularly Korean and Japanese stocks [1][2] - Recent news flow has been exceptionally positive, driven by fiscal tailwinds and strong macro data from the US and China [3] - Consensus forecasts for global GDP growth are being raised after a decline in May [4] - The delay in tariff deadlines has contributed to a positive short-term outlook [5] - The short-term outlook for stocks, both in the US and globally, is positive, with expectations of higher levels [5] Long-Term Concerns - Tariffs are expected to be damaging to the US and global economies in the long term [6] - Policy uncertainty poses a risk to US companies [6] - US stocks are expected to suffer from high valuations and ongoing policy uncertainty, leading to higher business costs [7] Currency and Emerging Markets - The recent US dollar strength is attributed to a short-term positioning squeeze [8][9] - A longer-term dollar depreciation trend is expected [9] - Tariffs are expected to have an inflationary impact, potentially leading to higher US yields [10] - Emerging markets (EM) are still considered attractive due to the expected dollar depreciation [11][12] - Dips in EM investments are expected to be bought into by investors [13]

Marc, walk us through what the defensive trade in this market is. Is defense still a defensive trade. Your take.I'm not so sure it is a defensive trait, given that the exceptional surgery seen in some of the valuations of those stocks. This has been a long running narrative and I actually think it's quite a bullish and aggressive story. You know, we're talking about the kind of quibbling about what Spain will get to in terms of percentage of GDP spend.But the overall story here is that Europe is moving to a ...