Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

Cross Asset Strategy

<ul>
<li>The arrival of the second Trump administration has triggered a wave of commentary justifying lower exposure to US financial markets. Dislike of US trade policy is the main driving force.</li>
<li>The case for greater exposure to Europe is undermined by significant economic stagnation and deindustrialisation in Germany, thereby raising questions about the future economic and financial stability in the region.</li>
<li>Gold is the big winner in 2025 due to portfolio diversification, driven by geopolitical tensions and US dollar weakness. The consensus global economic outlook for 2026 suggests  range-bound gold prices.</li>
</ul>


The arrival of the second Trump administration has triggered a wave of commentary justifying lower exposure to US financial markets. Dislike of US trade policy is the main driving force.
The case for greater exposure to Europe is undermined by significant economic stagnation and deindustrialisation in Germany, thereby raising questions about the future economic and financial stability in the region.
Gold is the big winner in 2025 due to portfolio diversification, driven by geopolitical tensions and US dollar weakness. The consensus global economic outlook for 2026 suggests  range-bound gold prices.


The Diversification Debate: German Stagnation Undermines the Case for Europe, but Gold Wins in 2025

Macroeconomics

<ul>
<li>The Fed lowered its policy rate by 25 basis points and announced a liquidity management programme to add cash to the banking system during a period of seasonal stress.</li>
<li>New forward guidance suggests only two more rate reductions over the next two years, but Chairman Powell seemed more dovish about the outlook for policy in his press conference.</li>
<li>Fed policy settings have become less restrictive and have almost returned to neutrality, based on r*. Real-Time data from commodity and equity markets suggest monetary conditions have eased since April.</li>
</ul>


The Fed lowered its policy rate by 25 basis points and announced a liquidity management programme to add cash to the banking system during a period of seasonal stress.
New forward guidance suggests only two more rate reductions over the next two years, but Chairman Powell seemed more dovish about the outlook for policy in his press conference.
Fed policy settings have become less restrictive and have almost returned to neutrality, based on r*. Real-Time data from commodity and equity markets suggest monetary conditions have eased since April.


Fed Policy Taking Dovish Tilt in 2026 as Liquidity Management Programme Aims to Lower Repo Stress

<ul>
<li>Ending quantitative tightening will not eradicate pressure on bank reserves due to Treasury borrowing. Liquidity will be boosted in 2026 by depletion of the Treasury's General Account at the Fed.</li>
<li>The One Big Beautiful Bill Act (OBBBA) enacted retroactive tax breaks to 1 January 2025 without changes to withholding tax schedules, thereby ensuring large refunds in 2026 H1.</li>
<li>The economic impact of the OBBBA's tax breaks will be smaller compared to COVID-19 pandemic-related cheques because they favour households with higher propensities to save. Data-dependent Fed policy will continue.</li>
</ul>


Ending quantitative tightening will not eradicate pressure on bank reserves due to Treasury borrowing. Liquidity will be boosted in 2026 by depletion of the Treasury's General Account at the Fed.
The One Big Beautiful Bill Act (OBBBA) enacted retroactive tax breaks to 1 January 2025 without changes to withholding tax schedules, thereby ensuring large refunds in 2026 H1.
The economic impact of the OBBBA's tax breaks will be smaller compared to COVID-19 pandemic-related cheques because they favour households with higher propensities to save. Data-dependent Fed policy will continue.


Tax Refunds to Support Consumers in 2026 H1, Raising Inflation and Fed Policy Concerns

<ul>
<li>The Bank of Japan's aggressive purchasing foray in the government bond market under Governor Kuroda now presents legacy issues due to the return of inflation and investors shunning duration risk.</li>
<li>Japan's economy faces rising headwinds in 2025. The minority government has responded to slowing growth by announcing an aggressive fiscal stimulus aimed at boosting near-term activity and reducing headline inflation.</li>
<li>Unwinding of yen carry trades by Japanese investors is unlikely to impact US Treasuries significantly due to healthy demand from domestic investors. Yen-sourced global liquidity has already fallen in 2025.</li>
</ul>


The Bank of Japan's aggressive purchasing foray in the government bond market under Governor Kuroda now presents legacy issues due to the return of inflation and investors shunning duration risk.
Japan's economy faces rising headwinds in 2025. The minority government has responded to slowing growth by announcing an aggressive fiscal stimulus aimed at boosting near-term activity and reducing headline inflation.
Unwinding of yen carry trades by Japanese investors is unlikely to impact US Treasuries significantly due to healthy demand from domestic investors. Yen-sourced global liquidity has already fallen in 2025.


Bank of Japan Policy Outlook Complicated by Fiscal Stimulus and Past Policy Legacies

<ul>
<li>Prolonged quantitative easing by the Fed has made balance sheet shrinkage difficult without producing periods of cash shortages in the banking system, and has raised the neutral federal funds rate.</li>
<li>Regional Federal Reserve Bank Presidents have become more hawkish since September about  inflation, arguing against a December policy easing, but September's Employment Situation report did justify previous policy rate reductions.</li>
<li>Chairman Powell remains cautious about tariffs. Recent historical research by the Federal Reserve Bank of San Francisco suggests that higher unemployment and disinflation are the long-term outcomes of higher tariffs.</li>
</ul>


Prolonged quantitative easing by the Fed has made balance sheet shrinkage difficult without producing periods of cash shortages in the banking system, and has raised the neutral federal funds rate.
Regional Federal Reserve Bank Presidents have become more hawkish since September about  inflation, arguing against a December policy easing, but September's Employment Situation report did justify previous policy rate reductions.
Chairman Powell remains cautious about tariffs. Recent historical research by the Federal Reserve Bank of San Francisco suggests that higher unemployment and disinflation are the long-term outcomes of higher tariffs.


Fed Policy Outlook Heavily Influenced by QE Legacy Issues