Barclays_The_Macro_Wrap_How_low_will_they_go

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 10.The Macro WrapHow low will they go?All eyes on this week's FOMC meeting and guidance aroundthe path for monetary policy.The Macro Wrap is your weekly, need-to-know guide to our key macro views, implications formarkets and trending research.The stage seems set for the Fed to resume interest rate cuts, we expect three 25bp cuts ateach remaining meeting this year (and we expect the dot plot to show the same). Our EquityStrategy team dusted off the history books to find out what happens after Fed cuts resume.Historically, when a cutting cycle begins without a downturn, equities grind higher andoutperform bonds over 6m. If followed by a recession, equities tend to dip post-cut butrebound over 12m, with bonds outperforming early.US August CPI was broadly in line with our expectations. Our inflation view is unchanged – weexpect tariff-related pressures to become more visible in Q4. The Fed faces few obstacles inmoving rates toward neutral. Underlying inflation remains contained, and labour marketrisks are skewed to the downside; we stay long duration.The ECB held rates. President Lagarde says inflation is "where we want it". Growth risks arebalanced. The front end will likely be stuck in a waiting game.UK Spend Trends show total spend rose 2.1% y/y in August. The BoE is likely to hold at 4%.QT may slow to £75-80bn. Risks are tilted toward a shift in active sales away from the longend – and possibly an end to active selling. Gilt 10y and 30y ASW could rally in that scenario.The Budget looms large. GBP short positioning is vulnerable to a credible fiscal plan.Political uncertainty in Japan leads us to push our BoJ hike call from October to January.Focus now shifts to succession after the PM’s resignation. Markets are pricing only mild fiscalexpansion, but term premia risks remain. We recommend 1y2s5s bear-steepeners.Chinese exports missed and CPI slipped into deflation on food prices. There are no signs ofcollapse in high-frequency data. Meanwhile, the role of Chinese SPR build-ups in supportingspot fundamentals appears overstated. We maintain our $66/bbl Brent forecast for 2026.FICC ResearchMacro PMG15 Septemb