Heteronomics Archive

February 23, 2024

HEW: Grinding Out Dovish Delusions

Dovish market expectations have continued to be ground out of pricing amid a failure of the economic data to weaken or policymakers to signal cuts soon. We explained our view that proximity to 2% inflation is neither necessary nor sufficient for rate cuts.
Flash HICP inflation data for February is the main event for us next week. Without any national releases so far, and with the 2024 weights now known, our forecast aligns with the economic consensus of 2.5%. The RBNZ is the only major policy decision next week.

By Philip Rush

February 16, 2024

A deluge of UK data revealed a shockingly tight labour market despite a technical recession exaggerated by a spurious fall in retail sales that fully unwound in January. UK inflation was depressed by new weights while the US data lifted hawks.
Next week is quieter, with the final EA inflation print a highlight for us. It is on the cusp of rounding down from 2.75%, but national releases aren’t triggering that yet. Monetary policy announcements are only scheduled from Indonesia and South Korea.

By Philip Rush

February 09, 2024

The past week has been quiet for economic data, leaving us to focus on explaining our hawkish views in the latest Heteronomics Economics Monthly (HEM) and wage analysis. Peru, Mexico, Thailand, India and the RBA announced their policy decisions.
Next week, things will reverse, with only the Philippines announcing rates amid a heavy flow of UK data releases. The old-style LFS UR data are already confirmed to have fallen, as we hawkishly expected. We also forecast CPI inflation to print strong again.

By Philip Rush

February 02, 2024

The Fed explicitly pushed back against a March cut, while BoE forecasts implicitly favoured a later-than-priced start. Yet, dovish market pricing survives. EA GDP growth, services inflation, and blockbuster US payrolls don’t offer reasons to cut in a hurry.
Next week, it’s the turn of the RBA to respond to lower inflation news and the market’s dovish repricing. Thailand, India, Mexico and Peru will also announce their policy decisions amid a cacophony of speeches by central bankers elsewhere.

By Philip Rush