Most recent
Gavekal Research
Incentives And Imbalances
Tan Kai Xian
10 Sep 2026
The Trump administration wants to reduce the US external deficit, but the incentives needed to do so are not yet in place, says Kai Xian. Strong asset prices encourage US households to spend and attract foreign capital, while notwithstanding recent treasury market ructions, fiscal pressure remains limited. Unless expensive US equities and an overvalued dollar fall under their own weight, the US external deficit is therefore likely to remain large or widen further.
Gavekal-IS
Where Does The Money Go?
Didier Darcet
10 Sep 2026
The cost of financial intermediation in the US has remained remarkably stable at around 2% a year for more than a century, despite huge productivity gains and sharply falling fund management fees. For Didier, the explanation may lie in Baumol’s cost disease, as rising coordination and compliance costs have absorbed much of the savings generated by technology. This matters particularly for long-term government bonds, whose real returns increasingly struggle to cover the cost of keeping the financial system running.
Gavekal Research
Bessent Disappoints
Will Denyer
10 Sep 2026
In August, US Treasury Secretary Scott Bessent promised to “at least double” the size of upcoming buybacks at the long end of the treasury curve. The question was how far above that floor Bessent would go. On Wednesday, the Treasury announced the scale of its first expanded buyback. In the event, Bessent did more than the minimum, but not enough to cap yields.
Gavekal Research
Video: Germany And European Political Risk
Cedric Gemehl
9 Sep 2026
The Alternative für Deutschland’s record 44% showing in Saxony-Anhalt has made global headlines, but German equities, bonds and the euro have barely reacted. In this interview, Cedric explains why the near-term economic and financial implications are likely to be limited and why the result should be seen more as a political signal than a template for Germany as a whole. Longer term, however, the AfD’s growing momentum in Europe’s largest economy deserves attention, particularly if Germany’s political firewall against the party begins to weaken.
Gavekal Dragonomics
The Capex Correction Continues
Thomas Gatley
Investing In People Is Also Industrial Policy
Tilly Zhang
The Narrowing Profit Boom
Thomas Gatley
Chokepoints Aren’t Changing
Andrew Batson
Shrinking The Presales System
Xiaoxi Zhang
Gavekal Research
Why Won’t Beijing Step On The Gas?
Louis-Vincent Gave
No Good Outcomes For Energy Inflation
Tom Holland
Stability Begets Instability
Charles Gave
Market Signals From The Yen And US Bonds
Anatole Kaletsky
Are US Long Bonds A Buy? (Part III)
Will Denyer
Gavekal Technologies
A China Tech Report Card
Arthur Kroeber, AJ Cortese, Tom Hancock
The Deployment Challenge For Cheap Solar
AJ Cortese
Alibaba’s AI Conundrum
Laila Khawaja
China Wind Power’s Global Challenge
AJ Cortese
The Next Stage Of The LLM Race
Laila Khawaja
Gavekal-IS
The Macroeconomics Of AI In Practice
Didier Darcet
The Macroeconomics Of AI: Part II
Didier Darcet
The Macroeconomics Of AI In Simple Terms
Didier Darcet
Currency Momentum Trading
Didier Darcet
The End Of The Risk-Free Asset
Didier Darcet
Gavekal Research
Who Is Copying Who? Part IV
Louis-Vincent Gave
27 Jul 2026
The growing push to restrict Chinese AI models could mark a major escalation in US-China tensions—and a watershed for the US economy. Louis argues that a ban would protect US tech giants at the expense of start-ups, consumers and productivity, while accelerating the fragmentation of the global technology system. Over time, the result could be weaker US equities, a softer dollar and higher bond yields, raising the question of whether such a policy would truly serve the public good or merely entrench corporate power.
Checking The Boxes
Our short take on the latest news
Fact
Surprise
Takeaway
French industrial production fell -0.4% MoM in Jul, versus -0.1% in Jun
Weaker than expected 0.2%; YoY, industrial production fell -0.5% in Jul, vs -0.1% in Jun
Calendar effects exaggerating weakness in demand; eurozone recovery will help
Mexico's CPI rose 3.3% YoY in Aug, versus 3.1% in Jul
As expected; core CPI rose 3.9% YoY in Aug, versus 4% in Jul
Benign inflation outlook implies Banxico will remain on prolonged pause
Taiwan's trade surplus widened to US$22.3bn in Aug, from US$17.2bn in Jul
Wider than expected US$19.9bn; YoY, imports (up 44%) rose faster than exports (up 41%)
Strong semiconductor demand continues to underpin robust export outlook
Poland left benchmark rate unchanged at 3.75%
As expected
Upside risks to inflation imply NBP may soon have to turn hawkish and tighten policy
Test Your Knowledge
In the first half of 2026, Dubai lost its crown as the airport with the most international passenger traffic. Which airport replaced it?
- Istanbul
- Hong Kong
- Singapore Changi
- Seoul Incheon
Chart of the Week
Although India's equity market has underperformed, the economy continues to grow, with the latest quarterly GDP figure coming in at 7.8% year-on-year. Skeptics question the government's revised methodology, but India’s soaring bank credit, which rose to 19.3% YoY in June, could be one of the first signals pointing to a revival in long-anticipated private-sector capital investment. This would indicate that India’s growth cycle is broadening beyond consumption. The acceleration, particularly in industrial lending, suggests that businesses are gaining confidence to invest, supported by healthier balance sheets.
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: Regime Change Can Cause Market Madness
Anatole Kaletsky, Tom Holland
3 Jul 2026
Markets continue to behave as if the world has not fundamentally changed, even as inflation, interest rates, geopolitics and global capital flows enter a new regime. Anatole argues that investors are systematically mispricing four major shifts: the long-term outlook for inflation and bond yields, the global growth cycle, the rotation from AI-led growth to cyclical value and the end of US exceptionalism.
The Iran War And Fallout
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.
Geoeconomic Monitor: Dominance And Decline
One upshot of the wars in the Persian Gulf and Ukraine is that the US oil and gas industry is booming. The drawback is that US consumers are paying twice Trump's target price for gasoline. With the midterms approaching, there is a risk the US administration might decide export controls are the only way to square the circle, writes Tom Holland. Meanwhile, Cedric Gemehl looks at how Germany is warming to the idea of protectionist measures to insulate its industries from Chinese competition.
US economy & markets
Incentives And Imbalances
The Trump administration wants to reduce the US external deficit, but the incentives needed to do so are not yet in place, says Kai Xian. Strong asset prices encourage US households to spend and attract foreign capital, while notwithstanding recent treasury market ructions, fiscal pressure remains limited. Unless expensive US equities and an overvalued dollar fall under their own weight, the US external deficit is therefore likely to remain large or widen further.
Bessent Disappoints
In August, US Treasury Secretary Scott Bessent promised to “at least double” the size of upcoming buybacks at the long end of the treasury curve. The question was how far above that floor Bessent would go. On Wednesday, the Treasury announced the scale of its first expanded buyback. In the event, Bessent did more than the minimum, but not enough to cap yields.
Are US Long Bonds A Buy? (Part III)
The extraordinary amount of capital being raised to fund the US artificial intelligence build-out may be one of the biggest forces pushing bond yields higher this year, says Will. His Wicksellian spread suggests financing costs could rise another 60bp before they seriously constrain investment, arguing against an aggressive overweight in long bonds for now. However, with that threshold drawing closer and the AI investment boom vulnerable to other threats, investors should move toward a neutral duration position and reconsider long bonds as a hedge for equity exposure.
AI Versus The Labor Market
Federal Reserve chair Kevin Warsh has argued that the AI revolution will support real GDP growth, raise productivity and and weigh on inflation. So far, however, solid US productivity growth since the launch of ChatGPT in late 2022 has coincided with rising inflation and real GDP growth continuing to chug along at around its 20-year median of 2.3%. The missing piece in the puzzle may be the labor market.
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: Germany And European Political Risk
Cedric Gemehl
9 Sep 2026
The Alternative für Deutschland’s record 44% showing in Saxony-Anhalt has made global headlines, but German equities, bonds and the euro have barely reacted. In this interview, Cedric explains why the near-term economic and financial implications are likely to be limited and why the result should be seen more as a political signal than a template for Germany as a whole. Longer term, however, the AfD’s growing momentum in Europe’s largest economy deserves attention, particularly if Germany’s political firewall against the party begins to weaken.
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
Can Spanish Dominance Continue?
Following a decade of disappointing performance, Spain is once again dominating international league tables. The MSCI Spain index has delivered a total return in US dollar terms of 250% over the past four years, more than twice the 100% return posted by MSCI AC World over the same period. The question now is whether this dominance can be sustained.
The Good, The Bad And The Ugly For Eurozone Bonds
Energy prices have picked up since late June, once again pushing inflation expectations higher and leading markets to price in more ECB rate hikes. But broadly, energy prices remain below their March highs. In contrast, eurozone sovereign bond yields are now well above their March high. This suggests that there are other forces beyond energy prices driving up eurozone yields. These forces can be divided into three categories: the good, the bad and the ugly.
Europe’s Public Investment Boom Changes Shape
The end of the EU’s post-Covid investment program at the end of this month will bring a significant shift in Europe’s public investment cycle, but not necessarily the investment cliff that might have been feared. As Brussels-funded civilian spending winds down, investment will rotate toward defense and geographically from Southern and Eastern Europe toward Germany and Northern Europe. August examines how these shifts will reshape Europe’s growth impulse in 2027 and change the beneficiaries of public spending.
The (Better) Case For European Banks
After more than a decade in the wilderness, European bank stocks have now had four good years, outperforming their US counterparts since 2022 in US dollar terms. The question is whether this outperformance can continue. The short answer is yes. European bank stocks are no longer priced at distressed levels, but with the earnings outlooks for European and US banks both solid, there is still room for European valuations to improve compared with the US.
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
