Archive

January 26, 2024
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HEW: Doves Resist Hawkish Flight

  • Broad and surprising resilience in the flash PMIs continued to defy dovish expectations, and President Lagarde said it was premature to discuss rate cuts. Yet markets price an aggressive easing path that extended slightly in the EA even while the UK parred back.
  • Next week, the Fed should fail to support expectations for an immediate cut, putting the final nail in the coffin of March pricing. Hawkish BoE guidance through above-target inflation on market rates may not pack much of a punch. EA HICP could print low again.

By Philip Rush

January 19, 2024
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HEW: Doves Made To Eat Their Hats

  • Numerous policymakers pushed back against dovish market pricing this week. Resilience in most data, including our relatively high UK inflation forecast being exceeded, prevents the doves from finding the support they need. We expect further repricing.
  • The ECB can formalise its pushback in its decision next week. It should remain data-dependent but translate that as probably not permitting a cut before the summer. Japan, Canada, Norway, and Malaysia are also scheduled to announce rates.

By Philip Rush

January 12, 2024
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HEW: Holiday Hangover Hits Old Trades

  • A spuriously dovish December faced immediate resistance after Christmas, and we expect this hawkish move to extend. Our monthly and thematic take on macro lessons for 2024 explores the fundamental drivers and market misperceptions.
  • Next week is another quiet one for monetary policy decisions, with only Indonesia announcing. However, it’s busy on the data front, with UK inflation a highlight. We are 0.1pp above the CPI and RPI consensus at 3.9% and 5.1%, respectively.

By Philip Rush

December 22, 2023
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HEW: Happy Dovish Holidays

  • It’s been another dovish week to end the active part of 2023. UK inflation shocked to the downside, albeit from unsustainable broad discounting (seen in the microdata). The BOJ is holding for longer, and Chile cut surprisingly far, partly because of Fed pricing.
  • The Christmas holiday season pushes most things aside, so next week is blissfully quiet. As usual, the Heteronomics Economics Weekly will take a break for the festive lull. We’ll be back in January for the Euro area flash inflation data. Happy Holidays!

By Philip Rush

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