Archive

October 18, 2024
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HEW: European Doves Are Too Stretched

  • A consecutive ECB rate cut and the disinflationary UK inflation surprise extended dovish pricing. It looks stretched in absolute terms and relative to the US. Labour markets are more resilient in Europe, which still matters to medium-term inflation.
  • The Bank of Canada is expected to follow the Fed with a 50bp cut next week in the primary policy event. Flash PMIs on Thursday are the most important data release for us, not least because of the spurious chasm between US highs and Euro area lows.

By Philip Rush

October 11, 2024
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HEW: October’s Wave of Easing

  • US inflation joined the punchy payrolls release in exceeding expectations, defying the dovish bias. The RBNZ followed the Fed’s 50bp, and Korea started cutting, but Peru hawkishly surprised with rates on hold. The early-easers are having second thoughts.
  • Next week’s policy focus is the ECB, which we expect to cut amid a dis-inflated outlook and disappointing demand. The market and consensus agree although it is not inevitable. UK inflation data are set to slow while the labour market remains tight.

By Philip Rush

October 04, 2024
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HEW: Everything Pushes Price Alignment

  • Powell’s pushback against cutting by another 50bp contrasted with Bailey’s openness to becoming more aggressive. Low EA inflation, in line with our forecast, also contrasted with the punchy payroll risk crystalising. Pricing for policy continued its realignment.
  • Next week’s focus is US inflation and the Fed minutes, but there are also some second-tier monetary policy announcements. The consensus for a 50bp RBNZ cut is the most prominent. The other policy highlights are decisions from Peru, Korea, Israel, and India.

By Philip Rush

September 27, 2024
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HEW: Shrinking Fed Exceptionalism

  • Stimulus from China has encouraged sentiment, but not in the Euro area where plummeting PMIs and some surprisingly soft flash inflation releases weighed. The Fed’s dovishly priced extremes became less exceptional from both sides.
  • Next week’s data could extend that as the Euro area HICP is tracking low while US pricing looks much more vulnerable to another fall in the unemployment rate. Policy decisions are only from Colombia and Poland, so Powell’s speech is the main event.

By Philip Rush

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