Henry Occleston
Summary The BoE’s March meeting aligned with our expectation, albeit with less dovish voting. We read little into this. The bar is high for data to prevent quarterly cuts. However, by August, we expect fiscal tightening, labour market loosening and soft core services inflation will push the BoE to accelerate cuts. February inflation will struggle […]
Macro Hive
Key Events G10 In the US, there is… Personal income and spending – Friday. Consensus assumes a recovery in spending to 0.6% MoM and implicitly a decline in the savings rate, which would be consistent with my view that the US economy will prove more resilient to the tariffs than market consensus assumes. CB consumer […]
Henry Occleston
Summary We expect the BoE to leave the bank rate unchanged at 4.5%, with Dhingra, Taylor and Mann voting for another cut. We would be unsurprised if Mann backed another 50bp cut: our BoE LLM sentiment index supports her fear that transmission to financial conditions has weakened. The minutes will indicate whether this view has […]
Macro Hive
Key Events G10 In the US, there is only one key data point: S&P PMIs – Friday. These are more a trading than an economic event as PMIs have decoupled from GDP. Please see our event monitor for market impact. Otherwise, this is a data-lite week. Market-moving surprises will more likely come from President Trump’s […]
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 […]
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 […]
Macro Hive
Key Events G10 In the US, these are the highlights: Inauguration – Monday. Reports suggest up to 100 day-one executive orders. Key ones include tariffs, but the incoming administration has skilfully prepared the markets and plans a gradual and predictable phase in. This could be dollar negative. S&P PMIS – Friday. These are more trading […]
Bilal Hafeez
Speech given to members of a leading UK political party in London on 5 December 2024. The UK’s Fundamental Problem: Productivity Rather than talking about the recent UK budget or other such announcements, I would rather discuss the broader context of what hampers the UK economy. From there, we can then understand which are the […]
Henry Occleston
Summary The BoE cut 25bp last week as expected. The MPR forecasts and tone of comments were largely in line with our base-case expectation. Inflation was revised down near-term, but revised up in the long-term too, albeit with the positive skew removed as per our base-case. Headline and core CPI profiles to year-end seem reasonable, […]
Henry Occleston
Summary We expect the BoE will cut rates by 25bp this week, with a 6:3 vote split. The accompanying MPR will be important, there are many moving parts, particularly the inclusion of the UK’s new budget. My expectation is that BoE look through much of the budget impact, retain expectations for further gradual easing, and […]
Macro Hive
Key Events G10 In the US, the key data point is: Existing/new home sales – Wednesday/Thursday. Consensus expects roughly unchanged numbers from August, which would align with a sluggish residential investment recovery. The Eurozone and UK has a quiet week for hard data but numerous central bank speakers and survey results: Preliminary PMIs – Thursday. […]
Richard Jones
Summary This week’s UK inflation data was weaker than expected, with headline and core at the lowest levels since 2021. This has weighed on UK yields and GBP and increased the probability of two 25bp BoE rate cuts in November and December. Market Implications We expect further downside for UK yields and GBP. We like […]
Henry Occleston
Summary The BoE voted (almost unanimously) not to cut in September and explicitly guided a ‘gradual approach’ to easing. However, we think recent data continues to suggest dovishness. Meanwhile, Greene and Mann (hawks) show increasing concern with consumer weakness. We are less optimistic than both on the outlook for the UK consumer based on the […]
Viresh Kanabar, Ben Ford
Summary Core and services inflation rose to 3.6% YoY and 5.6% in August. And while core now sits above BoE forecasts (3.4%), services inflation remains below. Meanwhile, wage growth is decelerating too slowly to force the BoE into a September rate cut. Assuming the BoE maintains a monthly pace of £100bn for balance sheet reduction, […]
Viresh Kanabar, Ben Ford
Summary Core and services inflation rose to 3.6% YoY and 5.6% in August. And while core now sits above BoE forecasts (3.4%), services inflation remains below. Meanwhile, wage growth is decelerating too slowly to force the BoE into a September rate cut. Assuming the BoE maintains a monthly pace of £100bn for balance sheet reduction, […]
Henry Occleston
Summary A September cut may require a continued undershoot in headline and services inflation (our expectation) and signs of further labour market easing (less certain). The September meeting will also see a decision on QT for the year ahead. Given the maturity profile, the risk is skewed towards slower active sales. This would present more […]
Macro Hive
Key Events G10 In the US, the main data is: CPI – Wednesday. Consensus is 0.2% MoM for core. The Fed will look for continued OER disinflation and, based on CPI and Tuesday’s PPI, an estimate of core PCE near 20bp. Retail sales – Wednesday. Following June’s 0.4%, consensus expects a slowdown to 0.1% ex […]
Macro Hive
Key Events G10 In the US, there is only one key event: ISM Services PMI – Monday. Following the NFP miss, any miss relative to consensus of 51.3 could see further rate cuts priced in. In the Eurozone and UK, it is a quiet week: German Final July CPI – Friday. Preliminary EZ July inflation […]
Henry Occleston
Summary The BoE cut 25bp, in line with economist consensus. We had been low conviction on the decision but have long been dovish on the BoE outlook and positioned accordingly. The vote was tight, 5:4 in favour of cutting. As expected, forecasts and comments were hawkish (decision ‘finely balanced’, ‘upside risks to outlook’). However, the […]
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