An end in sight: The Macro Wrap is your weekly, need-to-know guide to Barclays key macro views, implications for markets, and our trending research.

Research evidence excerpt

An end in sight: The Macro Wrap is your weekly, need-to-know guide to Barclays key macro views, implications for markets, and our trending research.

Barclays | Macro Wrap

The market reactions depend on the perceived shift in the balance of risks to the dual

mandate, the role of tails in elevated core inflation, and the preferred mix of policy tools -

including the balance sheet - in assessing the policy stance.

AI capex remains a dominant force for markets. Following Alphabet’s recent equity rise and

reports of others taking a similar approach, we argued that equity capital does not signal last

resort financing. Indeed, it broadens the funding base, reduces reliance on any single

channel, and gives issuers more flexibility as AI investment stretches further into the decade.

The ECB delivered a much-anticipated hike this week and we expect a further 25bp hike in

September. Given short-term uncertainty, President Lagarde argued there was no

justification for forward guidance (‘it will be what it will be’). We remain neutral on the front

end and prefer the belly of 2s5s10s fly. We continue to believe that European equities’ tactical

asymmetry looks better now, with valuations and positioning reset offering some

diversification benefit against crowded and correlated AI trades.

Another eventful week in Westminster, with the resignations of two ministers adding to the

political noise and briefly shifting focus toward fiscal and defence priorities rather than

Makerfield. That said, 18 June is a key day for the UK economy, with the Makerfield by-

election coinciding with the MPC decision. We expect policy rates to stay at 3.75% with a 7-2

vote split.

China exports accelerated in May and beat expectations, with AI-related and green-tech

goods the key drivers.