Most recent
Gavekal Research
The EU’s Tariff Countdown
August Gudmundsson, Cedric Gemehl
4 Jul 2025
As a July 9 deadline nears for the US and European Union to reach a trade deal a Brussels-advocated offramp has been put in the mix. This situation leaves the EU facing three different tariff scenarios. To make sense of them, August and Cedric assess three economic effects that will weigh on European growth depending which outcome plays out.
Gavekal Research
Redefining European Competitiveness
Cedric Gemehl
4 Jul 2025
Europe is undergoing a genuine macroeconomic regime shift. Clients have often pushed back on this view, arguing that nothing has really changed aside from Germany’s fiscal reform. Strictly speaking, this is a fair point; Germany will account for the bulk of the widening in the EU’s aggregate budget deficit over the coming years. However, a tight focus on the fiscal arithmetic risks missing the wood for the trees.
Gavekal Research
Quarterly Strategy Review: 2Q25
Louis-Vincent Gave
3 Jul 2025
In this new quarterly report, Louis assesses the key investment drivers in the preceding quarter and seeks insights about what will impact markets in the next period. He focuses on the broad strategy environment, as well as the outlook for equities, fixed income, and currencies.
Gavekal Research
So, I Must Be Stupid Too
Charles Gave
3 Jul 2025
The US president wants the Fed to cut interest rates. He has mentioned 1% as a suitable level (compared with the current Fed funds rate of 4.5%). He seems to base his call on the fact—which everyone knows—that low interest rates are good for economic growth. There is just one problem with this “fact.” It is not true.
Gavekal Dragonomics
Rethinking Technology Funding
Tilly Zhang
How Long Will The Auto Price War Last?
Ernan Cui
Next Steps For Stimulus
Wei He
Consumer Lending Is In Trouble
Xiaoxi Zhang
Negotiating From Strength
Thomas Gatley
Testing The Limits Of Industrial Policy
Thomas Gatley
Assessing The Consumption Push
Andrew Batson
Growth After The Trade Truce
Wei He, Dragonomics Team
When Deposit Rates Decline
Xiaoxi Zhang, Wei He
The New Technology Hubs
Tilly Zhang
More research
The West’s Challenge In Rare Earths
Tom Miller
Video: Where Is The US Jobs Market Going?
Tan Kai Xian
The Asian Bullwhip
Udith Sikand
An Ugly Quarter For The US Dollar
Louis-Vincent Gave
Fiscal Drag Before The Fun Starts
Will Denyer
Towards A Fragmented Yet Better Global Payments System
Charles Gave
Will The Real Bund Yield Please Stand Up?
Cedric Gemehl
Webinar: Pricing Another Middle Eastern War
Tom Holland, Udith Sikand, Cedric Gemehl
Video: Nato And European Integration
Cedric Gemehl
The Other Side Of The Fed
Tan Kai Xian
Gavekal Research
The Other Side Of The Fed
Tan Kai Xian
26 Jun 2025
Compared to the launch of trade wars, bunker-busting missions, or even a big tax-cutting budget, Wednesday’s announcement of new capital rules for US banks felt decidedly prosaic. The Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency will loosen up around US$220bn in capital held within their subsidiaries. The impact of all this will really matter for investors.
Checking The Boxes
Our short take on the latest news
Fact
Surprise
Takeaway
US nonfarm payrolls rose 147k in Jun, versus 144k in May
Rise greater than 110k expected; average hourly earnings rose 3.7% YoY, versus 3.8%
Not-too-hot, not-too-cold labor market conditions favor US equities
US ISM services PMI rose to 50.8 in Jun, from 49.9 in May
Higher than 50.5 expected
The US is still growing despite trade uncertainty; strong private sector balance sheets help
Sweden's services PMI rose to 54.6 in Jun, from 50.9 in May
NA
Points to accelerating recovery, but recent weak consumption data warrants caution
Switzerland's CPI rose 0.1% YoY in Jun, versus -0.1% in May
Inflation higher than -0.1% expected; core CPI rose 0.6%, versus 0.5%
SNB will welcome exit from deflation, but continued CHF strength is a core concern
Test Your Knowledge
Which tech business generates the greatest revenue per employee?
- Lyft
- TikTok
- Nvidia
- YouTube
- OnlyFans
Chart of the Week
The Trump administration is putting pressure on US allies to boost defence spending to 5% of GDP. That “global standard” comprises core military spending of 3.5% of GDP along with 1.5% of GDP worth of spending on related logistics and infrastructure. Even so, the core military spending target alone is a significant jump from the current 2% aspirational threshold that most allies are already struggling to meet.
Open Chart
Gavekal Research
Essential Reading: A Book For Every Week Of The Year
Gavekal is often asked for a recommended reading list. So, here it is: a book a week that everyone interested in the world of macro investing—whether hoary veteran or eager apprentice—can benefit from reading.
Gavekal Research
Webinar: Pricing Another Middle Eastern War
Tom Holland, Udith Sikand, Cedric Gemehl
26 Jun 2025
Investors last week seemed to be betting that the United States would hold off on directly attacking Iran. Now, after the weekend’s US airstrikes and Trump's push for a ceasefire, are all parties really ready to cease hostilities? Or is this just the start of a regional war in the Middle East that could severely disrupt oil supplies and spark a surge in the crude price? Our team assesses the latest developments on the ground and consider the vulnerabilities of the major economic regions should the worst occur and the price of oil skyrocket.
Tariff Troubles
Negotiating From Strength
Nearly three months after US President Donald Trump dramatically escalated tariffs on China, it is clear that the administration overestimated its leverage against Beijing. Thomas argues that the latest trade data underscore that China is negotiating from a position of strength resting on two foundations: rare-earth export controls and a remarkably resilient export sector.
Webinar: China's Economic Strategy Amid Trade Conflict
China and the US are talking again, after the first phone call between Presidents Trump and Xi since Trump took office. But the path toward a substantive trade agreement is strewn with boulders. Arthur Kroeber and Andrew Batson discussed how China will handle the trade talks, what it will do to support its economy, and how seriously we should take its policy pivot towards more consumption-led growth.
After London, What’s The Deal Space?
The latest trade negotiations drama in London probably leaves us back where we were a month ago—though the precise terms of the agreement are not yet public. China’s hardball tactics have exposed some vulnerabilities among the US and its allies and marginally increased the chance that Washington will give some ground. But the deal space remains narrow.
Asia’s Plan To Keep America Sweet
On Tuesday, the US and China agreed to extend their trade war truce pending a check in with both sides’ leadership. In the meantime, other Asian nations are attempting to tread a path that placates Donald Trump without picking sides in this great power standoff. It means that as the July 9 deadline approaches for the potential imposition of Trump’s “reciprocal tariffs”, Asian economies are adopting survival strategies. In this piece, Tom and Udith explore how those are breaking down across a heterogeneous region.
US economy & markets
Fiscal Drag Before The Fun Starts
When Donald Trump took office in January, the budget deficit as a share of GDP was set to contract in the following few years. This was largely due to expiring tax cuts. Since then, Trump has raised import tariffs, and the Senate is on the apparent final run this week to try and pass
tax cuts in his “big, beautiful bill”. How will all this shake out in the near, medium, and long term—and what does it mean for markets?
The Other Side Of The Fed
Compared to the launch of trade wars, bunker-busting missions, or even a big tax-cutting budget, Wednesday’s announcement of new capital rules for US banks felt decidedly prosaic. The Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency will loosen up around US$220bn in capital held within their subsidiaries. The impact of all this will really matter for investors.
Trump’s Influence On The Fed
The Federal Open Market Committee voted unanimously last week to hold interest rates steady. But then a few days after, three members curiously floated the possibility of a rate cut as soon as their next meeting, before Chair Jay Powell poured cold water on the idea. What should we make of this divergence of views at the FOMC? And what does it mean for the future trajectory of Fed policy?
A Devil’s Advocate For Dollar Bears
The consensus in the market, and in our firm, is increasingly dollar bearish. There are good reasons for this, and one does not want to be contrarian for the sake of it. Still, it makes sense to step back and ask what could cause the US dollar to rebound, if only in a counter-trend rally.
China chartbook
Gavekal Dragonomics
Testing The Limits Of Industrial Policy
Thomas Gatley
20 Jun 2025
China’s lavishly subsidized industrial policy has delivered some substantial achievements in key technology sectors. But the costs of that strategy started to become more apparent in 2024, Thomas argues in his annual chartbook on the state of the corporate sector. A strategy that relentlessly expands supply while leaving domestic demand weak results in steady erosion of margins and profitability, which will make it harder for firms to continue to push the technological pace.
India chartbook
Gavekal Research
India Macro Update: Hold The Confetti
Udith Sikand, Tom Miller
5 Jun 2025
India’s economy is in the early stage of a cyclical recovery enabled by supportive policy settings. Sustaining the positive momentum will, however, be tricky, say Udith and Tom. A continued recovery in domestic consumption is encouraging, but external uncertainty could dampen sentiment and weigh on investment.
Latest video
Gavekal Research
Video: Where Is The US Jobs Market Going?
Tan Kai Xian
2 Jul 2025
So far in 2025, the US labor market has been a case of “not too hot, not too cold.” Although trade war uncertainties have muted some hiring plans, the job openings and employment data have given no reasons to expect a marked softening in the economy. KX assesses the how the labor market is likely to develop from here.
Strategy Chartbook
Gavekal Research
Quarterly Strategy Review: 2Q25
Louis-Vincent Gave
3 Jul 2025
In this new quarterly report, Louis assesses the key investment drivers in the preceding quarter and seeks insights about what will impact markets in the next period. He focuses on the broad strategy environment, as well as the outlook for equities, fixed income, and currencies.
Emerging markets
Video: Are EMs Back?
It’s been a good quarter for the broad emerging markets complex. The MSCI EM index has returned almost 7% in US dollar terms, while US equities are down by some -3.5%. So should investors jump on the EM train? Udith points out that there is a wide divergence in the performance of individual emerging markets, and the threat of tariffs hangs heavy over EM corporate earnings. Investors need to be selective.
Video: Southeast Asia Under Trump 2.0
Global investors are rightly focused on the potential losers from the United States pursuing an aggressively protectionist trade policy agenda, but there may be winners as well. Tom went in search of such economies last week. Today he explains how such “swing states” are likely to perform in an intensified period of great power rivalry between the US and China.
China Turbocharges EM Investment
As the rich world pulls up the protectionist drawbridge, investors risk missing a bigger story
in emerging markets. Here, Chinese outbound investment is rebounding after the fallow Covid years, and is driving a new wave of industrialization that promises to lower the cost of the green-energy transition.
Why This Time Has Been Different
During past episodes of risk-off volatility, the correlation between emerging market risk assets has shot up. But early August’s bout of market volatility saw a bifurcation in EMs, and no broader macroeconomic spillover effects—which speaks well of the growing maturity of emerging markets as an asset class.
Europe's economy
The EU’s Tariff Countdown
As a July 9 deadline nears for the US and European Union to reach a trade deal a Brussels-advocated offramp has been put in the mix. This situation leaves the EU facing three different tariff scenarios. To make sense of them, August and Cedric assess three economic effects that will weigh on European growth depending which outcome plays out.
Redefining European Competitiveness
Europe is undergoing a genuine macroeconomic regime shift. Clients have often pushed back on this view, arguing that nothing has really changed aside from Germany’s fiscal reform. Strictly speaking, this is a fair point; Germany will account for the bulk of the widening in the EU’s aggregate budget deficit over the coming years. However, a tight focus on the fiscal arithmetic risks missing the wood for the trees.
Will The Real Bund Yield Please Stand Up?
On a couple of occasions this week, the return on 10-year German bunds has dipped to 2.5%, which was the level seen the day before Germany’s government announced a historic loosening of its debt brake on March 5. That is not exactly the movement you would expect when a country known for fiscal restraint embarks on a multi-year spending splurge. Cedric examines what's been driving yields back down, and if they're likely to stay in their current range.
Eurozone Consumers Versus The Oil Market
Oil accounts for 37% of Europe’s primary consumption and most of it is imported. That makes Europe especially vulnerable to an oil shock should the Israel-Iran conflict widen to create huge disruption to oil shipments and a potential spike in the crude price. Yet despite oil prices rising 15% in the last five days, Cedric and August argue that the situation looks manageable, at least for eurozone consumers.
Currencies
An Ugly Quarter For The US Dollar
Towards A Fragmented Yet Better Global Payments System
Where Will The Excess Dollars Go?
Good News To Make You Happy From The JGB Market
Carefully Controlling Appreciation
Asia’s Potential Repatriation Flows
Oil & commodities
Webinar: Pricing Another Middle Eastern War
Asia’s Oil Vulnerability
The Fog Of War
The Economy Is Nothing But Energy Transformed: Iran-Israel Edition
Trading The Israel-Iran Conflict
The Implications Of Israel’s Action
