Dominique Dwor-Frecaut
Summary Current economic data does not support a September Federal Reserve (Fed) cut. Yet, because of contentious politics, Fed Chair Jerome Powell has been staying silent and allowed the market to price 100% risk of a September cut. I expect Powell to stay silent next week as market pricing is not far from the Fed’s […]
Dominique Dwor-Frecaut
Summary Vice President (VP) Kamala Harris is virtually assured of the nomination. Her nomination at the top of the Democratic ticket has made the race more competitive. Trump administration economic policies might not be as destabilizing as I initially feared. Market Implications I still expect one insurance Fed cut in 2024. Harris to Become Democratic […]
Dominique Dwor-Frecaut
Summary Following President Joe Biden’s exit from the presidential race, former president Donald Trump’s odds of winning have fallen but remain well above 50%. Vice President Kamala Harris seems the most likely nominee based on party endorsement and campaign finance considerations. While Harris could well be a more electable candidate than Biden, she still faces […]
Macro Hive
Key Events G10 In the US, there is… PCE price index, pers. income, spending – Friday. Consensus seems reasonable. The Fed watches the services component of PCE. We will examine median price PCE for indication of trend and see personal savings remaining around 4%. Q2 GDP – Thursday. Consensus is 1.9% vs the Atlanta Fed’s […]
Dominique Dwor-Frecaut
Summary ‘Excess savings’ have been spent, but the savings rate is not recovering. The low post-pandemic savings rate likely reflects pricier basic necessities. If so, a recovery in savings would require either faster real wage growth or a decline in the relative cost of basic necessities. Neither appear likely. A low and stable household savings […]
Dominique Dwor-Frecaut
Summary Growth and inflation have been surprising on the downside, though economic fundamentals remain strong. The Fed sees balanced risk to the employment and inflation legs of its mandate and could cut once in 2024 to lower downside risks to growth. The cut would most likely happen at the November or December FOMC as the […]
Macro Hive
Key Events G10 In the US, these are the important data points: Retail sales – Tuesday. Expect 0.2% for the control group, in line with consensus. Consumption growth is slowing due to catchup in personal income tax payments. Manufacturing production – Tuesday. Consensus of –0.1% mom appears reasonable, though the data says little about the […]
Dominique Dwor-Frecaut
Summary June CPI was below market expectations. The most important detail was the long-awaited OER slowdown. Supercore CPI was roughly unchanged from May and somewhat negative, though supercore PCE could be higher. June CPI increases risk of a 2024 insurance cut, though this would likely happen after the 5 November presidential election. Market Implications After […]
Dominique Dwor-Frecaut
Summary Growth is slowing, mainly due to a consumption slowdown. Slower consumption largely reflects a catchup on postponed tax payments in FY2023. The slowdown is likely to self-correct as tax payments normalize and businesses’ economic outlook remains sanguine. Market Implications I still expect no 2024 Fed cut, against the market pricing two by end-year. We […]
Richard Jones
Summary Since late March/early April, the 2-year US Treasury yield has traded in a ~4.6%/~5% range (currently 4.62%). We have preferred a buy-on-price-dips strategy since early April. A culmination of factors – US data surprises likely to become more positive, sticky inflation, and stretched technicals – means further short-end yield declines will be difficult. Market […]
Dominique Dwor-Frecaut
Summary Following the presidential debate, Donald Trump is surging in the polls and betting markets. A Supreme Court ruling has effectively ensured Trump will not have to stand in new trials before the elections. Trump’s vice president (VP) pick by 15 July could indicate his administration’s likely policies. The likelihood of President Joe Biden exiting […]
Dominique Dwor-Frecaut
Summary June NFPs were higher than expected but May’s were revised lower. Wage growth was unchanged MoM but slowed YoY. Unemployment rose further but I think this does not announce recession as: Employment growth has been resilient. Insured unemployment remains flat. Distribution of unemployment spells is inconsistent with a recession. Rather, the increase in unemployment […]
Richard Jones
When evaluating the performance of our momentum models we are considering the average performance across the one-, three-, and 12-month momentum models. Summary Momentum models were flat over the past week, with equity models up 0.5% WoW, rates flat WoW and FX down 0.2% WoW. All momentum models are down over a three-month timeframe, with […]
Viresh Kanabar, Dominique Dwor-Frecaut
Summary The cost of owning and operating a car has increased sharply since the pandemic thanks to higher costs for insurance, licencing, taxes, and finance. Remote work and a greater desire for Americans to travel abroad have also driven a shift toward air travel versus via a car. Meanwhile, more fuel-efficient vehicles and EVs have […]
Dominique Dwor-Frecaut
Summary A series of regional Fed research notes highlighting upside risks to inflation reflect the FOMC consensus. The risks of a second Donald Trump presidency have been rising, which supports no Fed cuts in 2024 because of higher 2025 inflation risks. This year the Jackson Hole symposium will be about monetary policy transmission, which the […]
Macro Hive
Key Events G10 In the US, the most important data is: NFP – Friday. We agree with the consensus on payrolls and unemployment. Wage growth will be more important than usual due to last month’s pickup, which some argue is the start of a trend. ISM PMIs – manu. Monday, services Wednesday. We agree with […]
Bilal Hafeez
Boris is one of the leading macro thinkers in the market. He is a managing director at Goldman Sachs.
Richard Jones
When evaluating the performance of our momentum models we are considering the average performance across the one-, three-, and 12-month momentum models. Summary Momentum models were flat over the past week, with equity models down 0.1% WoW, rates up 0.2% WoW and FX unchanged WoW. FX momentum models are the best performing over a three-month […]
Dominique Dwor-Frecaut
Summary The current account balance will likely weaken further due to: A growing budget deficit and accelerating corporate investment. Strong US growth and dollar. A weaker current account deficit is sustainable but leaves the US exposed to a reversal of the bond flows currently funding it. Market Implications A wider current account reflects growing resource […]
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