Archive

September 18, 2024
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EA Inflation Fuelled To Dip Into Trough

  • Euro area inflation’s headline slowing was broadly confirmed in the final release for August, along with the rise in services and sticky core inflation rates.
  • Monthly median impulses are at or slightly above 2% again, as the previous lows look exaggerated. Other underlying measures are also settling excessively high.
  • Falling petrol prices compound base effects to push September inflation down. The ECB is braced for a low outcome, so that need not bring forward a cut from December.

By Philip Rush

September 12, 2024
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ECB: Noctober With Shifting Risks

  • The ECB’s unsurprising unanimous 25bp deposit rate cut in September provided little guidance on what’s next. It was not a no to cutting in October, but that seems unlikely.
  • Forecasts are the current communication tool, and stability won’t justify a panicked acceleration of easing. We still expect the next 25bp ECB rate cut in December.
  • Although risks skew dovishly for October, a historically optimistic call for productivity booming beyond profit norms presents hawkish risks to the ECB’s 2025 forecast.

By Philip Rush

September 05, 2024
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Politics: The Far-Centre Will Fail

  • Dismissing popular concerns alienates potential voters for some traditional and current parties of government. The resultant democratic deficit positions them as far-centre.
  • Popular alternative views need careful respect, either triangulating their essence into the policy platform or an honest pitch for why an alternative path is superior.
  • Parties that adapt can thrive. Those who keep dismissing ideas outside their perceived Overton window will suffer. Political fortunes can be evaluated through this lens.

By Philip Rush

September 04, 2024
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Inconsistent Pricing is Too Dovish

  • Equity prices retested their peaks, but rate expectations for Dec-25 remain near their dysfunctional lows. Demand cannot be both high for revenues and low to justify easing.
  • Residual pricing for a 50bp Fed rate cut exacerbates the inconsistency. Realising a 25bp cut should hawkishly reprice US rates relative to others, supporting the USD.
  • The S&P500’s potential doesn’t seem worth the risk of a crash relative to the reliable money market yield, which could easily outperform, especially in risk-adjusted terms.

By Philip Rush

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