We advise, you decide

US President Trump’s approval rating is among the lowest for a sitting president in post-World War II US history and leaves an 80% probability that the US House of Representatives will shift to Democratic control, with US Senate facing a 50:50 chance of switching to Democratic control.

Our outlook for risk assets remains constructive, supported by broadening earnings growth, though tempered by persistent inflation and an oil market showing little sign of easing. Against this backdrop, we are raising our target range for US 10-year yields to 4.25–4.75%, with rising yields and oil prices standing out as the principal risks to our central scenario.

Strong jobs data reignited inflation concerns and increased rate-hike odds, as escalating US-Iran tensions pushed Treasury, Bund, and gilt yields higher, though September Fed odds held steady at 60%.

The joint US-Japan yen intervention – the first coordinated currency action between the two countries in 15 years – signals how seriously policymakers now regard the yen’s weakness. While the immediate impact was substantial, the medium-to-long-term effectiveness hinges on the fundamentals, and above all on the wide US-Japan rate gap that keeps carry trades attractive and leaves the yen vulnerable unless the Bank of Japan (BoJ) tightens rates further or the US Federal Reserve makes rate cuts. What are the key hurdles the BoJ must overcome to support currency stability without undermining growth?

Warsh’s hawkish tone on core PCE and rate primacy, backed by resilient data, raised the odds of a September rate hike, while Nvidia’s guidance kept the AI cycle intact, though equity gains stayed narrow and earnings-dependent.