Archive

UK: Turning the Statistical Corner

• The UK GDP surprise flipped to exceed expectations with 0.3% m-o-m growth in Nov-25 as residual seasonality turned past its trough. We now track 0.14% q-o-q for Q4.
• Further upside news is likely over the next few months as output surges again in Q1, pushing back dovish hopes for another rate cut. We still see the cutting cycle as over.
• Economists prefer to tell fundamental stories, ignoring statistical ones, but we should not be shocked by the impact of the predictable surprises created by this shortcoming.

By Philip Rush

Currency Constraint Ends Korea's Easing Cycle

• The BoK held the policy rate at 2.50%, in line with consensus, but effectively ended the easing bias, signalling a prolonged on-hold stance for 2026.​
• Despite improving growth and near-target inflation, FX weakness and financial stability risks limit the scope for future cuts and keep rate hikes a low-probability tail risk.​
• Housing and household debt vulnerabilities mean any change in the 2.50% rate will hinge on clearer won stabilisation and a sustained, benign inflation trajectory.

US Inflation Resumes Without Payback

• US inflation resumed its monthly trend in headline, core, and underlying services after nonsensical methodological noise around the shutdown, including non-collection itself.
• Payback from late sampling in November didn’t have an apparent inflationary effect, perhaps because the gap between collections didn’t leave long for other prices to rise.
• Surprises are skewing lower, but inflation is stuck above the target, so there isn’t a compelling case to cut again. We still expect the Fed to hold rates in January.

By Philip Rush

HEW: Turning 2026 Resiliently

• A festive feast in resilient GDP data has extended into tracking estimates for Q4 in the US and UK, while the US unemployment rate has fallen from revision-tempered highs.
• Falling PMIs were less encouraging, but don’t break resilient signals nor persistently excessive inflation signals. Plans to recover profit margins add to the BoE’s challenge.
• Next week’s US inflation data provides the first clean monthly rate after November’s nonsensical gap-filling. UK GDP data for November is the other highlight for us.

By Philip Rush