Archive

May 17, 2024
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HEW: Resilient Data Test Dependency

  • UK wage data extended their tendency to exceed headline expectations, although the BoE seems unfazed. Premature rate cuts risk stoking a financial bubble and policy reversal, similar to 1998. The UK doesn’t enjoy the EA’s disinflationary data.
  • Next week is heavy on monetary policy speeches, with rate decisions from the RBNZ, Indonesia, Korea and Chile. UK inflation data are our macro highlight, although we align with the current CPI consensus, and Thursday’s flash PMIs are also important.

By Philip Rush

May 10, 2024
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HEW: BoE Lunges Hopefully After ECB

  • A deluge of central bank decisions landed as expected, with cuts or cautious progress towards them over the past week. But the BoE’s bombshell guidance blew up our call and market pricing. We now expect an August cut but are worried it will be a mistake.
  • The macro data should be more of a market driver again next week, with US inflation on Wednesday, UK labour market data on Tuesday and rolling updates on HICP, GDP and employment around the EA. Only the Philippines has a notable rate decision for us.

By Philip Rush

May 03, 2024
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HEW: Policy Plumage Evolving

  • After Fed expectations overshot our September call, we plucked our hawkish plumage to become neutral on the market, just in time for a dovish Fed and payrolls. We still see value in hedging downside risk with equity options.
  • Despite recent upside news, the BoE seems desperate to cut, with that bias set to stay in its decision, albeit without any signal that a cut is imminent. Other highlights include the technical UK recession’s end and rate decisions in AU, SE, MY, BR, and PE.

By Philip Rush

April 26, 2024
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HEW: Hawks Fly Into the Fed Meeting

  • This week’s data releases have extended the hawkish pressures despite the US PMI disappointing. Shockingly high inflation appears to be eroding real demand. Delayed Fed cuts raised speculation of BOJ intervention, but Indonesia was the one to hike.
  • The Fed is set to maintain rates at its upcoming meeting. It should indicate that the next move will likely be a cut, but it is appropriate to wait longer. Like the consensus, we expect Euro area inflation to remain at 2.4% in the April flash.

By Philip Rush

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