Archive

September 09, 2025
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Fed: Politics Vs Fundamentals

  • President Trump’s current preference for rate cuts is not unconditional. Higher-order logic suggests this would not override fundamental resilience or fairly prove “TACO”.
  • Political pressure is state-dependent, with the messenger mattering more than the objective truth beneath any message. Trump’s Chair will have a stronger hand.
  • Brazil suffered President Lula’s pressure, but he still supported his “Golden Boy’s” turn from dovish dissent to forceful rate hikes. Fed pricing ignores the potential for change.

By Philip Rush

September 08, 2025
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France: Déjà Vu?

  • Despite the near certainty that the Bayrou government will fall on 8 September, investors are wary, rather than spooked, reckoning that they have seen all this before.
  • They are likely correct to judge that compromises will then be found, allowing the 2026 budget to be passed by a new centrist government.
  • However, this would again only be putting off the day when a real crisis point is reached.

By Alastair Newton

September 05, 2025
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HEW: Pauses On And Off

  • Another disappointing payroll release provides the fundamental cover needed for the Fed to end its pause with a rate cut on 17 September without being too political.
  • The BoE is starting its own pause, and if it goes a quarter without cutting, historically, it’s not resumed the cycle. Its DMP survey confirmed inflation’s persistent problem.
  • Another upside inflation surprise seems set to keep the ECB on hold amid record low unemployment. We also expect it to preserve its view that policy is in a good place.

By Philip Rush

September 04, 2025
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BoE Survey Says Inflation Persists

  • CFOs are telling the BoE that they plan to keep raising prices by more than 3% in 2026. The BoE should take notice, as this survey’s previous warnings have proven accurate.
  • Expected increases reflect the passthrough of further wage increases beyond a pace consistent with the target. They exceed even our already hawkish forecasts.
  • The BoE is unlikely to realise the sharp drop in wage growth it expects by year's end, without a shock to break the current regime, bolstering our call for no more rate cuts.

By Philip Rush

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