Archive

June 16, 2023
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HEW: Summit Not Reached by Skipping

  • Over the past week, UK labour market data revealed further signs of tightness that the latest GDP growth doesn’t end. Confirmation of EA inflation’s slowing, including in some core measures, still leaves it too high, so the ECB hiked and signalled for July.
  • In my view, next week’s UK inflation data may not justify market pricing, but our forecast is close to rounding higher, and the surprise trend is unfriendly. We expect the BoE to hike without reopening the door to 50bp steps or endorsing aggressive pricing.

By Philip Rush

June 09, 2023
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HEW: Bandwagon Joins the Hike

  • Over the past week, EA GDP revisions created a technical recession, yet that doesn’t fairly describe the fundamentals. More rate hikes remain necessary, with surprise hikes from the RBA and RBC providing timely support to the debate (and our broader call).
  • Next week’s calendar features UK GDP, labour market and EA HICP data. The Fed and ECB decisions are naturally more critical for market pricing, including of the BoE. Peer pressure is likely needed to stretch the BoE cycle’s path further than priced.

By Philip Rush

June 02, 2023
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HEW: Breathe-In Stretched Spreads

  • Over the past week, a US debt ceiling deal alleviated that risk, while EA inflation resumed its reassuring trend decline. Peak pricing for policy rates eased, but the UK-US spread seems stretched in 2023, despite worrying second-round effects in the UK.
  • Next week’s calendar captures the lull before the mid-month activity data releases, which is stretched slightly by a delay to UK GDP. Q1 EA employment and GDP data on Thursday are a highlight, albeit “old news”. Our monthly will be out on Monday.

By Philip Rush

May 26, 2023
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HEW: Panic Stations Over UK Failings

  • Over the past week, high UK inflation renewed hawkish fears in financial markets and led us to crystalise the upside risk to August, so we expect the BoE to hike then and in June. Global services activity is in rude health, and UK retail trends have flattened.
  • Next week’s calendar features flash inflation releases around the euro area, where we are in line with the current consensus for a 6.3% EA HICP print. Monetary aggregates and EA unemployment are other macro highlights for the month’s end.

By Philip Rush

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