Viresh Kanabar
Summary The BoJ maintained its policy rate today as expected. The BoJ still sees a sluggish growth outlook, while supply pressures stemming from higher food prices pushed 2025 inflation higher. Governor Ueda’s tone during the presser was dovish as he reiterated a US trade deal alone is insufficient to prompt a further hike. He also […]
Dominique Dwor-Frecaut
Summary The Fed did not cut as expected. Chair Powell prepared the ground for a September cut with a more positive inflation outlook and an acknowledgement of downside labour market risks. If unemployment remains within the current range, my base case, a 25bp cut is likely at September’s FOMC. Following the meeting, market pricing of […]
Dominique Dwor-Frecaut
Summary Employment risks are rising due to weaker growth that itself reflects low private sector confidence and continued extreme policy uncertainty. Weak growth is containing US tariffs’ passthrough, but long-term inflation risks are increasing. Long-term market-based inflation expectations remain stable while survey-based expectations are falling. The real economy and financial markets suggest the Fed’s policy […]
Henry Occleston
Summary The release sustains UK bearishness. Vacancies dropped, PAYE employment continued declining, wage growth undershot MPR. The unemployment rate rising is largely immaterial – LFS is a non-credible data source, and it was driven by a jump in the participation rate. Our view remains that the labour market is loosening faster than the BoE expects. […]
Henry Occleston
Summary UK headline inflation ticked back up in headline and core and remained stable in services. This was a broad beat versus consensus and slightly above MPR expectations. Beats in food appear to be beef and dairy related. But we would not write this off as transitory given sector inflation has been rising consistently YoY […]
Henry Occleston
Summary The MPC voted for no change in bank rate (4.25%), as expected. Minimal statement changes included adding a clearer indication of ‘slack opening up’ in the UK economy. We still expect the BoE to cut again in August and cut to 3.5% this year. Market Implications We remain long SFIZ6 in our model portfolio, […]
Dominique Dwor-Frecaut
Summary As expected, the Fed remained on hold and the 2025 dot showed two cuts. The FOMC economic assessment was unchanged and is more hawkish than recent data, which could reflect concerns the inflationary impact of tariffs is yet to come. The meeting has added to my conviction for a September cut as Macro Hive’s […]
Henry Occleston
Summary With no presser and no update to forecasts, the BoE’s policy announcement is unlikely to be eventful. While cracks continue growing in the UK economy, data has not derailed sufficiently enough for the BoE to change tack. We expect inflation to roughly align with May’s MPR: headline below consensus but core higher. We analyse […]
Dominique Dwor-Frecaut
Summary Following below-expectations CPI and above-expectations jobless claims, I now expect next week’s 2025 and 2026 dots to show two cuts each, from one and three cuts in my Fed preview. It is too early for the FOMC to form a view on the impact on the outlook of Israel’s most recent attack on Iran. […]
Dominique Dwor-Frecaut
Summary Since May’s FOMC, soft data weaknesses have started transmitting to hard data and the impact of tariffs on inflation has been limited, though it is early days. FOMC members’ overall objective is to prevent a de-anchoring of long-term inflation expectations and a permanent inflation increase. The SEP is likely to still show a soft-landing […]
Henry Occleston
Summary The ECB cut 25bp as expected. The presser was more hawkish, especially around comments that they are ‘in a good place’ after the cut. This and the updated dovish forecasts suggests room for the economy to outperform, further quashing need for another cut. However, we are wary that their assumptions on tariffs look optimistic. […]
Viresh Kanabar
Summary Governor Macklem executed a dovish hold during yesterday’s BoC meeting. Three themes emerged during the presser: Uncertainty is weighing on Canada’s economy. Inflation remains too high. A cut and a pause were discussed, with inflation data leading to a pause. Market Implications We believe the BoC will next cut its policy rate in July. […]
Henry Occleston
Summary The ECB will likely cut rates by 25bp this week given trade tensions and the recent CPI miss. While the doves will hold the reins near term, pushbacks should begin to grow. Updated medium-term forecasts must contend with low productivity growth, labour market tightness and rising fiscal spending. We do not think the ECB […]
Viresh Kanabar
Summary May’s labour data showed further loosening with the unemployment rate rising to 6.9%. However, this data was overshadowed by hotter inflation and consumption data. While one-offs have mostly driven inflation higher, core inflation above 3.5% remains too hot to allow the BoC to cut further. Falling household savings suggest consumers are loosening their belts […]
Dominique Dwor-Frecaut
Summary Post-‘Liberation Day’ inflation and available hard economic data have been soft. Policy uncertainty has fallen but remains high. Inflation expectations have fallen or remain consistent with the 2% Fed target. The Fed has turned hawkish, possibly due to limited post-tariff data availability and to a perceived need to assert its independence. With data softness […]
Henry Occleston
Summary The BoE cut 25bp as expected. Pill’s backing for a pause was an unexpectedly hawkish surprise. So too was Bailey’s comment that the decision among centrists was a coinflip until the tariff announcement. We retain our central case that they skip cutting in June but will have the evidence needed to accelerate cuts from […]
Henry Occleston
Summary We expect the MPC to cut 25bp this week, with Dhingra and possibly Taylor backing a larger cut. Forecasts are likely to be more dovish on tariffs, low energy costs and undershooting wage growth. This and broader tariff uncertainty will add to a dovish tone in the statement – but we do not expect […]
Henry Occleston
Summary We expect the ECB will cut 25bp this week, in line with consensus. For now, tariffs are dominating all else. In our view, the hawks are overly sanguine about inflation returning sustainably to target. However, hawkishness may not gain traction near-term given tariff fears and suppressed energy prices. The labour market continues to tighten […]
Viresh Kanabar
Summary We think the BoC will remain on hold tomorrow. Since the last meeting, reciprocal tariffs have impacted Canada less, while core inflation has crept above 3% YoY. Given recent CAD appreciation, further labour market weakness and the potentially smaller hit to inflation, there may be more focus on Canada’s growth outlook in the months […]
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