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Oil in 2026

• Last year’s downward trend in the price of oil is set to continue into 2026, with most analysts expecting Brent crude to test USD55pb in the first half of the year.
• There is undue concern about geopolitical supply disruption buoying prices, whereas we believe the real focus should be on what Opec+ decides to do at the end of the quarter.
• My forecast for Brent crude on 31 December is therefore USD55pb, but with the risk to this price skewed to the downside.

By Alastair Newton

HEM: Jan-26 Views & Challenges

• Hawkish cuts led markets to price less easing, or even hikes, but there was little change in BoE views.
• The MPC is split in the face of wage growth persistently above target-consistent levels but is bias to ease in May.
• Rising unemployment rates may aid the appropriateness of previous cuts if the neutral rate is less elevated.

US: Noisy November After Reopening

• US private payroll growth stayed steady through the government shutdown. Statisticians failed to collect much data for November, yielding a noisy surge in unemployment.
• The employment-to-population ratio is steady, as are job openings and layoffs. Churn is still low, with few quits or hires, but broad resilience appears to remain unbroken.
• Jobless claims are also stable into December, when headline data should improve. The Fed pre-empted bad news with past cuts and is unlikely to keep going in January.

By Philip Rush

Monetary Policy Tide Is Turning Up

• Markets are already pricing the return of rate hikes in 2026 for Canada, Australia and New Zealand, while policymakers elsewhere are starting to warn of the possibility.
• Transitional support to structural adjustments needs unwinding, as Canada signals most prominently. Broader activity resilience and inflation reveal the risk of overstimulation.
• The BoE already committed a policy mistake by easing too early, and is split by those recognising the persistent danger. Market pricing remains too dovish for 2026.

By Philip Rush