May 22, 2025

PMI Goods Vibes
- Broad improvements in the flash manufacturing PMIs demonstrate ongoing resilience relative to consumers’ bad vibes. Goods trade seemingly shrugged off the tariff shock.
- The UK was alone in weakening, but it is more susceptible to bad vibes, showing more noise than signal. April’s spurious lows were revised away and may repeat or rebound.
- Transmission to unemployment also isn’t happening, leaving little case for easing unless recessionary pressures build, and the PMIs still hawkishly suggest that isn’t the case.
By Philip Rush
May 20, 2025

Trump Doctrine: All Talk And No Trousers
- Despite the frenetic activity in the international arena that we have seen from the US in recent weeks, whether in trade or diplomacy, showmanship continues to trump substance, thereby posing real risks for policymakers and investors alike.
By Alastair Newton
May 14, 2025

USD Bears Broke The Bandwagon
- Investors ask whether threats to the USD’s reserve currency status are resting or dead, whereas we wonder if it was ever alive. Commentators routinely overextend narratives.
- The USD share of allocated FX reserves is already trending downward. A potential acceleration from smaller deficits and higher tariffs would partly offset the impact.
- Fuller hedging of USD asset holdings abroad may have already reached its limit. We still see more attractive mispricing elsewhere, such as excessively dovish rate curves.
By Philip Rush
May 13, 2025

US Inflation Trends Stick Against Tariffs
- A marginal downside surprise in headline US inflation measures preserves uncomfortably excessive trends, even without a significant tariff shock and with ongoing airfare falls.
- Companies may have helpfully smoothed out the tariff shock such that volatile policy never hits consumers. Services (ex-shelter) continued to grow too rapidly for rate cuts.
- Being in the right ballpark of the target isn’t good enough when the labour market remains tight. At least core price and wage inflation in the US isn’t as bad as in the UK.
By Philip Rush
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