Archive

August 12, 2024
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Trade: Back To The Future

  • Although the escalation in international trade tensions would be more extreme under a second Trump administration, protectionism will continue to rear its ugly head worldwide, irrespective of the outcome of the US election.

By Alastair Newton

August 08, 2024
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VAR Shock Pains Pass

  • Volatility spiked on 5 August, feeding dysfunctional dynamics. Risk assets have suffered but would be near their lows and soon recover their highs under historical examples.
  • Equity prices also fell into the Fed’s first rate cut in 1998 before the tech bubble was blown. The equivalent potential for easing to prove premature is undiminished.
  • There is no need for an emergency cut, and September’s monetary policy decisions should depend on the recession risk in macro data rather than on recent equity moves.

By Philip Rush

August 06, 2024
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China: “Confusion Will Be My Epitaph”?

  • Clarity over China’s otherwise fuzzy economic trajectory lies in Xi Jinping’s explanatory statement about the outcome of the Third Plenary and his oft-stated determination to make China technologically self-reliant as a hedge against external threats.

By Alastair Newton

August 01, 2024
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BoE Cut Through Fine Balance

  • The BoE cut by 25bp to 5.0%, as we expected, but still provided dovish news as the decision was finely balanced for and between MPC members, the consensus and pricing.
  • Confidence in the forecast increased enough for a rate cut, yet risks now skew to the upside from persistently high wage inflation. It is noncommittal about cutting again.
  • We still expect another cut in November before pausing amid excessive wage growth. That modal call could invert to rate hikes if the Fed also cuts prematurely.

By Philip Rush

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