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Gavekal Research
Central Banks Under Pressure
Will Denyer, Udith Sikand
15 Sep 2026
Amid a slew of central bank meetings this week, those of the Federal Reserve and Bank of Japan will garner particular attention. Both face political pressure, rising inflation and higher bond yields, leaving investors keen to see how policymakers respond and how markets react. Will and Udith do not expect policy to be the main driver of a shift in capital from the US to Japan, but argue that there is strong case for overweighting Japanese bonds.
Gavekal Dragonomics
The Energy Shock Moderates
Wei He, Dragonomics Team
15 Sep 2026
Industrial activity in China improved in August as more oil flowed through its refineries, easing some but not all of the concerns over the growth outlook. The energy shock initially seemed likely to be a short-term problem, but as the Middle East conflict has dragged on so has the impact on growth. Still, Wei and the Dragonomics team argue that there are signs the worst for China’s refinery sector may now be past.
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.
Gavekal Research
Rapidly Shifting Sands
Louis-Vincent Gave
14 Sep 2026
By any measure, it was a busy weekend. But in short, the growth in AI infrastructure spending, which had been the growth engine of large parts of the global equity markets, seems to suddenly no longer be a sure thing. This is occurring just as rising energy costs look set to take a bite out of growth and revive fears of stagflation. So against this backdrop, what is an optimistic investor to do?
Gavekal Dragonomics
Still Waiting For EV Consolidation
Ernan Cui
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
Gavekal Research
Webinar: Autumnal Trouble Ahead?
Louis-Vincent Gave, Charles Gave, Anatole Kaletsky
On Energy Stocks As A Portfolio Diversifier
Louis-Vincent Gave
Higher Rates; Uneven Pain
Cedric Gemehl
Incentives And Imbalances
Tan Kai Xian
Bessent Disappoints
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
Where Does The Money Go?
Didier Darcet
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
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
China industrial production rose 5.2% YoY in Aug, versus 4.5% in Jul
Above expected 4.8%
Increased industrial output narrowly driven by select export-oriented sectors
China retail sales in nominal terms rose 0.4% YoY in Aug, versus 0.6% in Jul
Below expected 0.8%
Reflective of continued weakness in labor market; downside risks to growth increasing
India CPI rose 4.8% YoY in Aug, versus 4.5% in Jul
Below expected 4.9%; core CPI rose 4.4% YoY in Aug, versus 4.2% in Jul
Growing upside risks to inflation likely to reinforce RBI's hawkish tilt
Canada CPI rose 3% YoY in Aug, the same pace as in Jul
As expected; core CPI rose 2.1% YoY in Aug, versus 1.9% in Jul
Uncertain inflation and growth outlook gives BoC room to remain on hold, for now
Test Your Knowledge
President Donald Trump announced that he would lift tariffs on British whisky after a four-day royal visit to the US in April. At what event did Trump announce an exemption for Irish whisky on Sunday?
- The World Crypto Conference in Dublin
- The International Whisky Competition in Cork
- The Irish Open golf tournament in Doonbeg
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: Autumnal Trouble Ahead?
Louis-Vincent Gave, Charles Gave, Anatole Kaletsky
11 Sep 2026
Global markets are being roiled by geopolitical tensions, rising bond yields and uncertainty over the outlook for inflation and monetary policy. At the same time, the AI boom and shifting trade and capital flows are reshaping the global economic and investment landscape. In our first webinar of the autumn season, Gavekal’s founding partners discuss what these crosscurrents mean for markets and how investors should position their portfolios.
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
Central Banks Under Pressure
Amid a slew of central bank meetings this week, those of the Federal Reserve and Bank of Japan will garner particular attention. Both face political pressure, rising inflation and higher bond yields, leaving investors keen to see how policymakers respond and how markets react. Will and Udith do not expect policy to be the main driver of a shift in capital from the US to Japan, but argue that there is strong case for overweighting Japanese bonds.
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.
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
Higher Rates; Uneven Pain
The European Central Bank delivered a well-telegraphed 25bp rate hike on Thursday, putting the policy rate at the upper bound of the 1.75% to 2.5% range the ECB estimates is neutral for the eurozone economy. Any further interest rate hikes will push monetary policy increasingly into restrictive territory. The question for investors therefore is how much any further hikes will put a brake on eurozone economic activity.
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.
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
