Archive

April 23, 2025
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Global Manufacturers Shrug Off Tariffs

  • Volatile and destructive US trade policy has roiled markets and confidence, but April's flash PMI data suggests the sector isn’t suffering significantly more than before.
  • The average held steady while the US balance increased. Weakness concentrated in the UK, where experience of the past decade suggests it is more distorted by bad vibes.
  • Unemployment data are a more reliable signal, albeit lagging, and these also remain remarkably resilient. Rate cuts rely on Trump breaking the economy, but lack evidence.

By Philip Rush

April 22, 2025
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Prisoner's Dilemma For Ukraine

  • Ukraine cannot avoid painful settlements as the US and Russia pull its resources apart. Europe has no veto over US taxpayers and can’t block all attempts to loosen sanctions.
  • Further progress to peace is likely over the next few months. If the US walks away from talks, it is most likely dropping support too, postponing peace while Russia gains more.
  • Intensifying support would raise risks along a hard-fought market-negative path. Risks will also remain more elevated in Korea after Ukraine’s misguided incursion into Russia.

By Philip Rush

April 17, 2025
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ECB: Cutting In Shadow of Shocks

  • The ECB’s seventh 25bp deposit rate cut to 2.25% risks becoming stimulative, but the shock from US trade policy seen through market moves demanded a response.
  • Central bankers are no more aware of the trade policy outlook than markets, but they are more aware of the potential inflationary effects and limits to effective easing.
  • Time will reveal the tariffs and impact, allowing the agile ECB to tackle this rather than just the shadow it has cast on anticipatory market pricing. We still expect a June cut.

By Philip Rush

April 16, 2025
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UK: Price War Dents Spring Inflation

  • A supermarket price war hit food prices, slowing UK CPI inflation below the headline consensus again. Upside news in clothing was offset by downside in game prices.
  • Repeating 2008’s experience would drive a game price rebound, but the food effect is more likely to persist. The median inflationary impulse should also rebound soon.
  • Unit wage costs remain inconsistent with the target, while energy and water utility bills will drive a massive jump in April. We still forecast a final 25bp BoE rate cut in May.

By Philip Rush

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