Barclays_The_Macro_Wrap_The_stag_and_the_flation

This document is intended for institutional investors and is not subject to all of theindependence and disclosure standards applicable to debt research reports prepared for retailinvestors under U.S. FINRA Rule 2242. Barclays trades the securities covered in this report for itsown account and on a discretionary basis on behalf of certain clients. Such trading interestsmay be contrary to the recommendations offered in this report.* This individual is a member of the Product Management Group and is not a Research AnalystAll research referenced herein has been previously published. You can view the full reports,including analyst certifications and other important disclosures, by clicking the hyperlinks inthis publication or by going to our Research portal on Barclays Live.Please see analyst certifications and important disclosures beginning on page 8.The Macro WrapThe stag and the flationWe expect signs of global growth slowing and US inflationpicking up as tariff-related pressures weighThe Macro Wrap is your need-to-know guide to the week ahead, summarising our key macroviews and the implications for markets• Signs of stagflation have crept back into US data. Services activity and new ordersplunged, and the prices-paid index reached heights not seen since COVID. Manufacturerspointed to disruptions, chaos and uncertainty in the aftermath of tariffs. The Trump-Xi phonecall reduces risks of trade-war escalation, for now. Separately, the Musk-Trump rift does notbode well for the appearance of order and institutional stability.• All eyes this week are on US inflation data (Wed), for the first real evidence of tariff-linkedprice pressures. We expect a slight pickup in core CPI to 0.27% m/m (2.9% y/y) in May, drivenentirely by goods. The UK government's Spending Review (Wed) should confirm real-termscuts for many departments, while pointing to tax rises to come.• What does this mean for assets?° Rates: Moderation in hard data and continued trade uncertainty argue for lower yields inthe US. Bills would be back with a bang once the debt limit is lifted. In Europe, front-endlongs offer value but also need a catalyst for asymmetry to realise. ° FX/local rates: Tariff noise is likely to persist but bond market stability measures cangenerate additional dollar relief. We see value in paying PLN2s10s, after Nawrocki'ssurprising win. ° Commodities: We turned less cautious on oil despite macro uncertainty and in line supply.We recommend going long the September-December 2026 calendar spread on WTI futures.° Credit: US spreads are likely to grind tighter in the near term, though RMBS could be anexception. We see some big opportunities in small caps. In Europe, loans will likelyoutperform bonds unless the ECB cuts rates more than four times.FICC ResearchMacro PMG9 June 2025Ben McLannahan*+44 (0)20 3134 9586ben.mclannahan@barclays.comBarclays, UKJennifer Cardilli*+1 212 526 8351jennifer.cardilli@barclays.comBCI, USJill Nentwig*+ 1 212 526 5129jillian.nentwig@barclays.