Archive

Euro Sentiment Flies Like Icarus

• Resilient data led to hawkish monetary policy guidance, consistent with our bullish Euro view. Fiscal announcements have super-charged that move, so we dropped our call.
• European Commission statements are an upper bound on loosening while Germany’s plans are not yet legislated. Extra defence spending on imports will also damp the Euro.
• Sentiment has flown too high. US trade policy seems set to hit Europe soon, potentially melting sentiment and sending the Euro plummeting back to Earth like Icarus.

By Philip Rush

US vs EU Part 4: Orwell That Ends Badly

• Amid all the transatlantic rumpus over Russia/Ukraine last week, of more significance to markets is Donald Trump’s 27 February threat to impose 25 percent tariffs on all European imports. The UK should not assume it is immune to this despite Keir Starmer playing the ‘king’s gambit’.

By Alastair Newton

HEM: Pausing Policy Easing

• Central banks should slow, pause, or stop cutting rates
• Inflation revisions are drifting up and surprising higher
• Labour cost rises remain above target-consistent levels
• Activity trends signal monetary policy as nearly neutral
• Rate hikes in 2026 could reverse unnecessary easing

Oil Update: Pipe Dreams

• With so many conflicting signals emerging from the US Administration, it is not surprising that both investors and extractors are increasingly cautious about politicians’ aspirations for the hydrocarbons market in both the US and Canada. This may be some small consolation for Opec.

By Alastair Newton