Archive

September 25, 2025
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Resilience Is Reinstating

  • Falling US jobless claims and bullish GDP revisions are reinstating evidence of ongoing resilience. Underlying GDP only slowed by about 0.1pp in H1, or 15% of 2024’s average.
  • Risk management rate cuts to balance the higher costs of being wrong on the downside raise the probability that easing proves premature and swiftly ends.
  • The ECB already sees the transmission of its past cuts trending loan growth higher. It may reach pressures consistent with hikes next year, and it already clashes with easing.

By Philip Rush

September 24, 2025
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Will AI save the US Economy?

  • European policymakers and investors see Donald Trump’s economic policies harming Republican prospects in the 2026 midterms and the 2028 general election.
  • The Trump Administration is placing a good deal of faith in AI as a panacea. But the US may not have the skilled labour or the power-generating capacity to fuel an AI boom.
  • Nor is it clear whether the current Administration is preparing for the related socio-economic disruption from which the MAGA faithful would be far from immune.

By Alastair Newton

September 23, 2025
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Broadly Slower Services PMIs

  • PMIs broadly disappointed and declined relative to August, but absolute levels mostly remain robust or at least expansionary. We are not concerned by these noisy moves.
  • Such broad slowing seems shocking relative to the past few months, but it is historically a regular occurrence. Five of the previous twelve were at least as broadly bad.
  • The labour market remains tight in the euro area, softened in the UK, and steady in the US. Slower activity does not mean disinflationary slack. We stay relatively hawkish.

By Philip Rush

September 18, 2025
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BoE Trims QT To Hold Policy Steady

  • The MPC unsurprisingly held rates while seeking an answer to its key question around inflation risks amid elevated expectations and a possible structural shift.
  • It also trimmed QT by £30bn to £70bn, keeping active sales of long gilts steady in the next three quarterly auctions while skewing QT towards short and medium gilts.
  • We still expect the MPC’s presumption of rate cuts resuming to fade out in early 2026 as hawkish pressures persist. Some offsetting fiscal space arises from QT being trimmed.

By Philip Rush

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