Barclays_Global_Portfolio_Manager_s_Digest_Shooting_for_the_Moon

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.Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companiescovered in its research reports. As a result, investors should be aware that the firm may have aconflict of interest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.* 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.FOR ANALYST CERTIFICATION(S) PLEASE SEE PAGE 33.FOR IMPORTANT EQUITY RESEARCH DISCLOSURES, PLEASE SEE PAGE 33.FOR IMPORTANT FIXED INCOME RESEARCH DISCLOSURES, PLEASE SEE PAGE 34.Global Portfolio Manager's DigestShooting for the MoonWe provide context and perspective on research acrossregions and asset classes, this week highlighting our analysisof the OBBB's impact on the U.S. deficit, the potential fordisinflation to be the baseline for the rest of the world, andwhat the rise in AI means for the credit market.• OBBB & Its Effects on the Deficit: With the One Big Beautiful Bill Act rushed into law muchearlier than many had expected, we look to fill in the analytical gap on its many details. Thenew law has significant implications for U.S. debt accumulation. The CBO expects itsprovisions to widen primary deficits by $3.4trn, cumulatively, over the 10-year budgetwindow relative to prior law. The CBO's latest scoring does not incorporate projected tariffrevenue, nor does it account for the likely extension of expiring tax provisions in FY28-29. Withcorrections for these influences, we think the federal deficit would likely widen to 5.8% of GDPthis year, to 6.7% in FY27, and then eventually settle at about 7% of GDP over FY30-34. Despitethe big deficit numbers, imprints on the outlook look to be relatively modest. Reflecting thispattern, our modeling points to an uplift in GDP growth of no more than 0.4pp through 2026,followed by a mild drag on growth, on balance, from 2027 onward. Although some speculatethat tax incentives from the new law could lead to a boom in capital spending, we think thesewill likely underwhelm. We expect a modest lift to equipment spending and R&D, spread overmany years.• Baseline Disinflation: As the Fed faces inflationary pressures, disinflation is becoming a solidbaseline for the rest of the world. This im