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Gavekal Dragonomics
Subsidizing Mortgages
Wei He, Dragonomics Team
30 Sep 2026
The central bank and finance ministry announced a new subsidy for the interest on home mortgages, part of a package of measures aimed to ensure China’s faltering GDP growth will meet this year’s target. Wei, Andrew and Xiaoxi argue that the home loan subsidy is a genuinely new policy, but is likely to have only a modest impact on the property market.
Gavekal Research
Burnham Starts Transforming Britain
Anatole Kaletsky
30 Sep 2026
Burnham’s speech to the Labour Party conference announced a cutback in pension spending that was unthinkable under Starmer. More importantly, it showed an openness to
possible U-turns in fiscal policy, EU relations and electoral reform. While the initial market reaction to Burnham’s speech was indifference or skepticism, there are three reasons why this really could be a turning point in Britain’s financial fortunes.
Gavekal Research
US Strategy: After The Inflationary Boom
Will Denyer, Tan Kai Xian
30 Sep 2026
For now, the US remains in an inflationary boom driven by AI investment and rising energy prices. While this backdrop could persist, the risks are rising that further energy disruption triggers a full-on inflationary bust or that higher interest rates and energy prices eventually tip the US economy into a deflationary bust. This, argue Will and Kai Xian, calls for a more balanced portfolio.
Gavekal Research
Not All Bond Markets Are Equal
Charles Gave
29 Sep 2026
Long-dated sovereign bond yields in France and the UK are now higher than their long-term growth rates of nominal GDP. And in the US, long-dated treasury yields are rapidly closing in on that threshold. With public debt in each country approaching or above 100% of GDP, Charles argues that three of the developed world’s major bond markets are at risk of falling into debt traps. Investors should steer well clear of their paper.
Gavekal Dragonomics
Infrastructure Is Becoming Ineffective
Wei He
Industrial Policy Delivers A Fiscal Payoff
Tilly Zhang
The Export Wave Is Cresting
Andrew Batson
A Reluctant Rise In EV Prices
Ernan Cui
Why Households Are Deleveraging
Wei He, Xiaoxi Zhang
Gavekal Research
The Important Sevens?
Louis-Vincent Gave
Are US Long Bonds A Buy? (Part IV)
Will Denyer
An Uneasy US-China Truce Rolls On
Arthur Kroeber
Latin America’s Hinge Election
Tom Miller, Udith Sikand
The Biggest Hot Potato In History
Charles Gave
Gavekal Technologies
Chinese EV Makers’ European Offensive
AJ Cortese
Webinar: The State Of China Tech
Arthur Kroeber, Laila Khawaja, AJ Cortese
China’s Anti-Dumping Calculus
Laila Khawaja
Breaking Up Is Hard To Do
Tom Hancock, AJ Cortese
The US-China AI Safety Debate
Laila Khawaja
Gavekal-IS
Amathia
Didier Darcet
When Asia Revalues…
Didier Darcet
Where Does The Money Go?
Didier Darcet
The Macroeconomics Of AI In Practice
Didier Darcet
The Macroeconomics Of AI: Part II
Didier Darcet
Gavekal Research
Desperately Seeking An Anchor
Charles Gave, Louis-Vincent Gave
14 Sep 2026
Charles and Louis argue that a new monetary anchor is emerging in Asia, centered on the renminbi, just as Western currencies and bond markets are becoming less reliable stores of value. With most of the world’s excess savings generated in Asia, more capital will stay in the region rather than flow into Western assets, eroding structural support for the US dollar, euro and Western bond markets.
Checking The Boxes
Our short take on the latest news
Fact
Surprise
Takeaway
US Conference Board consumer confidence index fell to 81.9 in Sep, from 88.6
Below expected 89
Rising inflation and interest rate expectations are weighing on consumer sentiment
Spain's HICP rose 5% YoY in Sep, versus 4.6% in Aug
Consumer inflation above expected 4.9%
Uptick driven by energy prices; services inflation remained stable
Japanese retail sales fell -1.2% MoM in Aug, versus 2.1% in Jul
Weaker than expected -1.1%; YoY, retail sales rose 2.7% in Aug, versus 3.7% in Jul
Volatile series; underlying trend is still positive on the back of real wage gains
China's manufacturing PMI rose to 50.1 in Sep, from 49.8 in Aug
As expected; non-manufacturing PMI rose to 50.2 in Sep, from 49 in Aug
Recovery unlikely to continue without more explicit policy support
Test Your Knowledge
Which of the following terms did UK prime minister Andy Burnham use most frequently in his party conference speech on Tuesday?
- Tax
- Care
- Energy
- People
- Climate
- Defense
Chart of the Week
After years of fierce competition, the price war between Chinese electric vehicle makers seems finally to be ending, as prices increased from 2025 to 2026. This aligns with the aims of the government’s anti-involution campaign, but the main reason for the change is rising costs, which have continued to push down auto makers' profit margins. The rise in prices will weigh on domestic EV sales, which have already declined this year.
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: The State Of China Tech
Arthur Kroeber, Laila Khawaja, AJ Cortese
25 Sep 2026
As presidents Donald Trump and Xi Jinping prepare for their summit meeting in Washington, China’s fast-growing technology capabilities are a major topic. The big questions at the moment are how close Chinese artificial-intelligence labs are to matching the US frontier models, and whether the two sides can start negotiating rules on AI safety. But behind those lie even bigger questions: What is the balance of technological power between the US and China? And how far can the world's two big tech powers go in pulling apart the thick webs of interdependence that tie them together?
The Iran War And Fallout
The Non-Threatening Energy Crisis
This weekend’s media made for sobering reading. Between bombs flying in the Middle East, more refineries blowing up in Russia and US senators calling for petroleum export bans, it felt like enough negative news flow to send hearts racing. But most major global equity markets remain close to all-time highs. Louis examines the possible reasons for this counterintuitive configuration.
No Good Outcomes For Energy Inflation
It is Wednesday. Warring parties in the Middle East are again exchanging fire, and energy prices are spiking. For investors, it may be tempting to shrug off the latest flare-up, but disregarding the latest escalation in the Persian Gulf would be rash. Developments in the region will matter greatly for the trajectory of inflation over the coming months, and therefore for financial markets.
The Record High Diesel Prices
Because of soaring crack spreads, diesel prices everywhere around the world are making new all-time highs, at least in nominal terms. In real terms, the diesel price is still lower than the 2022 spike that followed the start of the Ukraine war. But Louis points out that with a real term diesel price above US$5/gallon, few good things happen.
The Limits Of Economic Fury
The US administration is now switching its focus to a campaign of “economic fury” in an effort to achieve its strategic aims against Iran. It is not obvious that this latest phase of the conflict is any more likely to result in a quick and easy US victory than the kinetic war. However, the
economic implications of a prolonged stand-off may be less ominous than they at first appear.
US economy & markets
Are US Long Bonds A Buy? (Part IV)
US bonds face an unappealing near-term backdrop of persistent inflation, Fed tightening and heavy public and private-sector issuance. Yet unlike in 2022, valuations now favor bonds over equities, while rising real yields are approaching levels that could start to constrain capital spending and growth. For Will, this argues against going overweight bonds, but makes a neutral position increasingly attractive as a hedge against a sudden change in the investment environment.
Another Blow For Bonds?
The 10-year US treasury yield broke through the 5% level to hit 5.11%, its highest since the outbreak of the credit crunch in July 2007. With inflation pressure persistent and the Federal Reserve on a tightening track, yields could rise further in the near term. In addition, there are growing signs that the US labor market may be set to tighten, pushing both wage growth and inflation higher.
Where The US Is (Still) Exceptional
Compared with European stocks, US stocks are no longer exceptional. Over the past four years, there has been no sustained trend in the relative performance of the two. That said, at the sector level, US consumer discretionary and staples stocks have continued to outperform their European counterparts.
Dario Cannot Pace The AI Frontier, But Real Yields Might
The AI investment boom came under renewed threat Saturday when Anthropic’s chief executive argued that his company and others should “slow the pace” of model development to ensure safe deployment. At the same time, there is growing grassroots pressure to regulate the pace of data center deployment. Long-term bond yields have also climbed quickly. These are all potential threats to the AI capex boom. But how likely is each to seriously throttle investment?
China chartbook
Gavekal Dragonomics
Macro Update: Pushed And Pulled
Wei He, Dragonomics Team
3 Aug 2026
China’s economy is being pushed and pulled by two external shocks: the supply shock from the Iran war and the demand shock from the AI capex boom. Both are creating lots of volatility in trade flows, prices and profits, although the underlying trend of the domestic economy has not yet changed much. Neither are China’s policymakers showing much sign of significantly changing course. In our latest quarterly chartbook, Wei and the Dragonomics team diagnose the current situation and the policy outlook.
India chartbook
Gavekal Research
India Corporate Update: Waiting For Capex
Rohan Daswani, Udith Sikand
28 Aug 2026
India remains one of the world’s strongest growth stories, supported by resilient domestic demand, improving corporate balance sheets and strong credit growth. Yet as the boost from public infrastructure investment fades, the big question is whether these strengths can finally translate into a sustained revival in private investment. Rohan and Udith assess the prospects for that transition and the implication for Indian equities, where performance is increasingly diverging across sectors.
Latest video
Gavekal Research
Video: Behind The US Diesel Dilemma
Tom Holland
24 Sep 2026
After the average US pump price for diesel topped US$6.50 per gallon, politicians are increasingly calling for restrictions on US fuel exports in a bid to bring down prices for businesses and consumers ahead of November’s midterm elections. But while export controls might provide some temporary relief, any reduction in US prices will be short-lived, and will come at the cost of intense pain among US trading partners.
Strategy Chartbook
Gavekal Research
Quarterly Strategy Review: 2Q26
Louis-Vincent Gave
3 Jul 2026
The second quarter was dominated by an extraordinary surge in risk appetite as semiconductor stocks powered one of the largest increases in global equity market capitalization on record, yet beneath the exuberance, markets underwent significant macro shifts. Louis reviews the quarter's defining developments.
Emerging markets
EMs Are The New DMs
Emerging-market bonds have dramatically outperformed their developed-market peers since 2020, helped by greater policy credibility, deeper domestic financial markets and reduced reliance on foreign investors. With DM bond yields now hitting multi-year highs, policymakers may increasingly look to the EM playbook, including softer forms of financial repression, to stabilize their markets, says Udith. From the US to Japan, signs of this shift are already emerging, suggesting that EMs may have a thing or two to teach DMs.
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.
Europe's economy
Burnham Starts Transforming Britain
Burnham’s speech to the Labour Party conference announced a cutback in pension spending that was unthinkable under Starmer. More importantly, it showed an openness to
possible U-turns in fiscal policy, EU relations and electoral reform. While the initial market reaction to Burnham’s speech was indifference or skepticism, there are three reasons why this really could be a turning point in Britain’s financial fortunes.
The Nordic Model Under Deglobalization
The Nordic economies may look vulnerable to the same industrial pressures weighing on Germany, but much of their adjustment took place during the 2010s, when manufacturers shifted production abroad while retaining a specialized core at home. With domestic demand now recovering, August says the Nordics appear better placed than Germany to navigate a less global world and a potential new China shock
More Merzschmerz
In German, the language with a word for everything, Merzschmerz describes the pain of struggling for 50 years to climb the political ladder, only to get to the top and find that no one wanted you as leader, they just couldn’t think of anyone else. Well, for Germany’s federal chancellor, Friedrich Merz, the hurt has not faded over time. Speculations about a Kanzlertausch—a change of chancellor—are swirling. Cedric reads the political tea leaves.
Where The US Is (Still) Exceptional
Compared with European stocks, US stocks are no longer exceptional. Over the past four years, there has been no sustained trend in the relative performance of the two. That said, at the sector level, US consumer discretionary and staples stocks have continued to outperform their European counterparts.
Currencies
Important Recent Developments
The Slump In Asian Currencies
A Concentrated Inflationary Boom Or A Bet On The Fed?
Demand And Supply Of Money
Dialing Back Expectations For Appreciation
Monetizing US Budget Deficits
Oil & commodities
No Good Outcomes For Energy Inflation
Video: Towards An Uncertain Winter For Energy
The Quid Pro Quo That Wasn’t
The Energy Risk Remains (Part I)
Energy Markets Are Too Complacent
Video: Oil After Hormuz
