Dominique Dwor-Frecaut
Summary A surge in policy uncertainty is starting to undermine growth while inflation risks remain tilted to the upside. On the eve of the pre-meeting blackout, with the SPX already down 6%, Fed Chair Jerome Powell indicated a continuation of the Fed’s wait and see stance. Market Implications I still expect no cuts in 2025 […]
Dominique Dwor-Frecaut
Summary The surge in policy uncertainty has not impacted the labour market much yet. Nonfarm payrolls (NFP) were lower than expected for the second month in a row, but this could reflect data choppiness and residual seasonality. Labour supply growth remained weak. Most measures of labour market utilization indicate a still tight market. Nominal wage […]
Dominique Dwor-Frecaut
Summary President Donald Trump aims to reverse the decline in the income share of lower income Americans. If successful, this could create a macro regime change with higher growth and inflation as well as a steeper Phillips curve: The market consequences of the macro regime change include: Higher real yields. Ending US equity markets outperformance. […]
Dominique Dwor-Frecaut
Summary Yesterday’s swing in the Atlanta Fed Q1 GDP nowcast to -1.5% QoQ SAAR from 2.3% reflects a swing in imports caused by expectations of tariff increases. By contrast, the nowcast for final domestic demand growth remained positive, though well below actual Q4 GDP growth. The slowdown likely reflects higher consumer savings caused by concerns […]
Bilal Hafeez
Joe Lavorgna is a Managing Director and Chief Economist for SMBC Nikko Securities. He was previously the Chief Economist for the Americas at Natixis.
Dominique Dwor-Frecaut
Summary Net Fed tightening has not changed financial conditions much and growth remains well above trend. Strong consumption largely reflects the impact of the 2022-24 immigration surge and government-funded household deleveraging during the pandemic. Strong corporate investment reflects strong cash flow rather than increased leverage. The above suggests growth is more at risk from negative […]
Dominique Dwor-Frecaut
Summary Since the 29 January FOMC, data releases have generally been towards increasing inflation risks. Transmission of Fed easing to the real economy has been unequal. Household wealth has risen but credit growth remains weak. Recent Fedspeak shows the FOMC are wondering whether policy is restrictive enough. This creates risk the Fed could end its […]
Dominique Dwor-Frecaut
Summary For all of DOGE fanfare, the Treasury daily cash balance does not show a decline in expenditures. This is because DOGE is an auditing rather than a budgeting outlet. Congress does budgeting and the current budget resolution shows fiscal consolidation is to come mainly from the faster growth engineered by the administration’s economic policies, […]
Ben Ford
Summary The RBA cautiously lowered the cash rate by 25bps to 4.1% at its February meeting. Three factors drove the easing bias, one held it back. 1) Moderating underlying inflation saw price pressures below RBA forecast. Forward-looking data suggests continued easing, too. 2) Subdued private demand growth has worried the RBA. They have baked in […]
Dominique Dwor-Frecaut
Summary January’s CPI upside surprise did not change my big picture inflation view, stuck at about 1ppt above the Fed’s 2% target. Market and survey-based inflation expectations continued rising in January. Inflation trends remained stable and high. Evidence of cost pressures rose with unit labour costs increasing. Domestic demand pressures are raising inflation, though this […]
Dominique Dwor-Frecaut
Summary Nonfarm payrolls (NFPs) were lower than expected but an upward revision to December made up for the shortfall. Overall, the past month’s data still indicates strong labour demand and further labour market tightening. Annual data revisions provided a one-time statistical lift to labour supply, but the underlying fundamentals remain weak. Wage growth has been […]
Henry Occleston
Summary The BoE cut 25bp, as expected. MPR forecasts were bearish, and comments still indicate more cuts ahead. I read little into the two 50bp votes. Upward revisions to MPR near-term inflation forecasts exceeded our expectations, with smaller impact from one-offs than we anticipate. Despite labour market loosening, medium-term inflation is below target but still […]
Dominique Dwor-Frecaut
Summary Tariff increases are likely to proceed on two tracks. The long-term track is broad based, gradual and meant to generate revenues and support reshoring. Meanwhile, the ‘opportunistic’ track is country specific, aggressive and meant to exert leverage on trade partners. The ongoing ‘opportunistic’ tariff increase has created new policy uncertainty and delayed this year’s […]
Henry Occleston
Summary We expect the BoE will cut rates by 25bp this week, with an 8:1 vote split. The updated MPR projections will likely be much more bearish on the labour market and GDP, despite strong wage growth. Along with updated supply-side analysis, this should see inflation undershooting target by even more in the medium term […]
Bilal Hafeez
Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley, is a former senior policy adviser at the International Monetary Fund.
Dominique Dwor-Frecaut
Summary The Fed held rates as expected with its economic assessment and policy outlook unchanged, though a lack of details on the Trump administration’s policies has created unusual uncertainty. Chair Jerome Powell expects the immigration decline to continue and lead to a combination of lower job creation and continued labour market balance. Powell’s presser and […]
4 researchers
Market Pricing The market is pricing a 29% probability of a Fed cut in March and two cuts by 2025. UST Market Technicals A fortnight ago, our US Rates Technical Report (USRTR) showed technicals across the curve were oversold in all the UST futures contracts. Yesterday’s USRTR showed technicals are now a lot cleaner than […]
Dominique Dwor-Frecaut
Summary The Fed will likely hold rates steady next week as inflation and growth remain stable and high. It will have too little information on the Trump administration’s economic program to assess the impact on policy. Market Implications I still expect no cut in 2025 against markets pricing about 1.5 cuts. Stable and High Inflation […]
Bilal Hafeez
Phil is the founder of Suttle Economics – a leading research consultancy. Before that, he held senior roles at Tudor, the Institute of International Finance (IIF), JP Morgan, Barclays, the New York Fed and World Bank.
Macro Hive is the community platform for the thinking investor…
Already have an account?…
Spring sale - Prime Membership only £3 for 3 months! Get trade ideas and macro insights now
Your subscription has been successfully canceled.
Discount Applied - Your subscription has now updated with Coupon and from next payment Discount will be applied.