Berenberg Financial Research Hub

Berenberg’s research highlights a global economic landscape increasingly strained by geopolitical shocks, primarily the US-Iran conflict and resulting energy-led inflation. This instability has triggered a massive sell-off in bond markets, pushing US Treasury yields to 2007 levels and German yields to a 15-year high. In Japan, despite significant currency interventions exceeding $73 billion, the Yen remains under pressure near historic lows, prompting markets to anticipate a potential 25bp hike from the Bank of Japan. Berenberg analysts express particular concern regarding the Eurozone, characterizing the ECB's expected June rate hike as a potential mistake that could deepen an existing economic contraction. Regional data supports this caution, as the Eurozone Composite PMI has fallen to 47.5, with the services sector reaching a 63-month low amid eroding consumer spending power. While the US economy retains some resilience through long-term fixed mortgages, Berenberg forecasts a lower trend growth of 1.5% due to the impact of tariffs and immigration shifts. Ultimately, the research suggests a pivot in financial conditions from pricing in rate cuts to anticipating hikes, shifting the primary risk profile from inflation back toward global growth constraints.