Archive

October 21, 2024
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US Elections: Four Scenarios

  • Excepting the Senate, the US elections remain finely balanced, offering four scenarios with a 20% or higher probability. The four suggest that a Trump administration would be better able to pursue his agenda than a Harris administration would hers.

By Alastair Newton

October 17, 2024
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EA Disinflates Enough For October Cut

  • Euro area headline and services inflation were trimmed in the final prints for October, reinforcing the disinflationary imperative in the ECB’s decision to cut rates again.
  • The news on underlying inflation was mixed between countries and measures. Things broadly remain close to target-consistent levels but need not stay like that.
  • We remain concerned about potential over-extrapolation and focus on disinflationary data points, although that seems unlikely to change in time to block a December cut.

By Philip Rush

October 17, 2024
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ECB: Cuts On Coherent Dovish Signal

  • Surprisingly steep disinflation and drops in the PMIs shocked expectations for the ECB’s October meeting, which were matched by the realised 25bp rate cut.
  • The coherent story of disappointment magnified the strength of the signal enough for the ECB to act. Much more data will be available by the December decision.
  • No commitments were made to act or not, but the hurdle is lower with a forecast to communicate the totality of the news. We expect a cut then before the pace slows.

By Philip Rush

October 16, 2024
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UK Inflation Hits Its Bouncy Bottom

  • Surprisingly soft UK inflation data extended across the headline and conventional core metrics, partly because of substantial payback in airfares after August’s surge.
  • Only a slight unwind in October and ambiguous historical precedents for November mean much of this downside persists. However, other underlying signals were resilient.
  • The BoE can focus on this downside news and cut in November. Ultimately, signals for the underlying pressures in the cyclically tight UK economy should urge an early pause.

By Philip Rush

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