Dominique Dwor-Frecaut
Summary Relative to end-2024, banks reserves are up about $100bn. This reflects the reinstatement of the debt ceiling on 1 January, which forces the Treasury to run down its balance at the Treasury to fund the deficit. The reserves increase likely will not last as January tends to be a cash surplus month for the […]
Dominique Dwor-Frecaut
Summary Much higher than expected NFP and other data sources show still-strong labour demand. By contrast, labour supply seems to be peaking and will likely suffer from fewer migrants under the incoming administration. Various indicators point to an already tight labour market, with signs the economy could be running out of easily employable workers. While […]
Dominique Dwor-Frecaut
Summary Ongoing Los Angeles (LA) fires are causing large-scale destruction of housing, infrastructure and production assets, with uncertain and costly reconstruction. The fires highlight the impact of climate change as a negative supply shock and cast doubts on the Fed’s hopes that above target services inflation can be offset with below target goods inflation. Market […]
Ben Ford, Bilal Hafeez
Summary Trump will be sworn in on 20 January at 12PM ET (5PM UKT). He is expected to deliver over 25 executive orders on his first day in office. This aligns with the new direction US presidents are taking to deliver early results. The first wave of orders is rumoured to focus on initial tariff […]
Dominique Dwor-Frecaut
Summary CPI was in line with expectations. Goods deflation stopped, shelter slowed and supercore inflation accelerated somewhat. Trend measures show inflation is becoming stickier. Market Implications I continue to expect the Fed to cut 25bp in December, in line with markets pricing 95% risk. I expect the Fed to remain on hold in 2025, against […]
Dominique Dwor-Frecaut
Summary The Fed is likely to cut next week despite disinflation stalling as it believes policy is still restrictive and risks to the mandate are balanced. The SEP is likely to show two 2025 cuts next year due to: Recently slower progress on inflation. Risks of higher R*. Uncertainty on the incoming Donald Trump administration. […]
Dominique Dwor-Frecaut
Summary We still know little about the incoming Donald Trump administration’s key policies, budget deficit, tariffs and immigration. Key economic nominees so far suggest a focus on both market performance and median household income growth. These need not conflict if growth remains high enough, but we need information to assess whether this is a realistic […]
Dominique Dwor-Frecaut
Summary NFP printed 227k, roughly in line with consensus of 220k. This was more than the 150k I expected but does not change my expectations of a medium-term decline in NFP to about 50k. The labour market remained tight and wage growth stuck at 4% but the ongoing productivity acceleration makes this consistent with 2% […]
Dominique Dwor-Frecaut
Summary Fed Chair Jerome Powell has signalled he intends to keep inflation within its current range. He likely intends to implement opportunistic disinflation, a Fed strategy from the 1990s that relies on disinflationary shocks to lower inflation. But today’s macro backdrop is less favourable compared with the 1990s, suggesting the desired disinflationary shocks may not […]
Dominique Dwor-Frecaut
Summary The incoming Treasury Secretary will likely have two key priorities. First is funding the government: expect lower bill issuance and a lower TGA target at the February QRA. Second is enacting Trump’s electoral promises, which will probably widen the budget deficit. Market Implications Likely fiscal stimulus adds to my conviction of no cuts in […]
Dominique Dwor-Frecaut
Summary Recent NFP prints and pre-pandemic CBO projections suggest sub-100k NFPs could be the new normal now the immigration surge is over. If so, a large negative surprise at the 6 December NFP release is likely, which would rekindle recessions fears and expectations of Fed cuts. I expect the Fed to respond with a cut […]
Dominique Dwor-Frecaut
Summary US CPI aligned with expectations. Goods continued deflating, housing accelerated, and supercore inflation slowed. Trend measures show inflation becoming stickier. Market Implications I still expect the Fed to cut 25bp in December, aligning with markets pricing 80% risk. I expect the Fed to remain on hold in 2025, against markets pricing about two cuts. […]
Dominique Dwor-Frecaut
Summary The immigration surge has been the main driver of the recent episode of disinflation with above trend growth. With the immigration surge over, GDP growth is likely to slow about 0.75 ppt over the next 12 months, wage growth will remain stuck around its current level and cost pressures will continue. Demand pressures, as […]
Dominique Dwor-Frecaut
Summary On the eve of election day, betting markets and polls show Vice President Kamala Harris and presidential candidate Donald Trump neck and neck. The Harris campaign has greatly outraised the Trump campaign, and the former has a much larger cash balance to spend on the last few weeks of the campaign, which could bring […]
Dominique Dwor-Frecaut
Summary NFP printed at 12k, below 100k consensus. The low print reflects mainly the impact of strikes and lower immigration, and to a lesser extent the hurricanes. The labour market remained tight and wage growth accelerated. Wage growth is likely to remain sticky as the immigration surge is over and union militancy seems stronger than […]
Dominique Dwor-Frecaut
Summary The Fed will likely cut 25bp next week and keep a hawkish tone. Since Chair Jerome Powell turned more hawkish in late September, growth and labour market data have supported this shift. Inflation data is likely to remain within the Fed’s comfort zone until end-2024. The Fed believes its policy stance is restrictive, but […]
Dominique Dwor-Frecaut
Summary We travel into the future and publish a policy letter from the Treasury Secretary nominee to President-elect Donald Trump arguing that: Inflation should be kept below 3% through: Keeping policy changes simple and predictable. No increase in the budget deficit. Strong competition policy. Letting the Fed be the Fed. Productivity should be raised through […]
Dominique Dwor-Frecaut
Summary Despite continuing to outraise presidential candidate Donald Trump by a wide margin, Vice President Kamala Harris has lost her lead. The odds of a Republican sweep have surged, in line with better presidential and Congressional Republican polling. Market Implications I still expect the Fed to cut two more times in 2024 but 2025 is […]
Dominique Dwor-Frecaut
Summary Unemployment has been increasing for the past 1.5 years, triggering Sahm’s rule. But Sahm’s rule is more a statistical regularity than a predictive model of recession. With other labour market indicators and aggregate demand data pointing at expansion, the US economy is not headed for recession. Market Implications We are short 10Y and 30Y […]
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.