Archive

March 22, 2024
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HEW: Doves Fly Into Holidays Again

  • Most releases over the past week may not have been that surprising, but the market read central bank decisions as worth letting dovish trades fly into another holiday season. Then Andrew Bailey forgot he sucks at guidance, and he crashed the currency.
  • The fortnight ahead is much quieter for releases, partly because of the Easter holidays. Highlights for us are flash HICP on the data front, while Chile and the Riksbank are it for policy. This publication will take its usual Easter break and return in a fortnight.

By Philip Rush


March 15, 2024
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HEW: Keep Kicking the Cutting Can

  • Resilient US data continued to defy dovish hopes, with CPI and PPI inflation exceeding expectations again. UK activity data were at our below expectations but still broadly excessive. Markets have continued to kick rate cut pricing later.
  • Next week’s monetary policy decisions can at least officially confirm the dovish delay. Contrary to pricing not long ago, the Fed won’t cut, and the median rate dots may rise. The BoE is also on hold, and February’s disinflation won’t change that.

By Philip Rush


March 08, 2024
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HEW: Policymakers Waiting and Seeing

  • The UK Budget proved an anticlimactic snoozefest as the government didn’t go beyond recent leaks. Monetary policy was also broadly steady, with the ECB and Bank of Canada waiting for news, but Peru defied expectations for another cut.
  • Next week is quiet for policy announcements outside of Eastern Europe. Labour market and GDP data are the main UK releases, but US CPI inflation data on Tuesday will be far more critical for global markets. Some final national HICP releases are also coming.

By Philip Rush


March 01, 2024
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HEW: ECB Ready to Jump First Hurdle

  • Markets keep pushing back easing, but we believe pricing needs to adjust to higher time preferences raising neutral policy rates. The shock from past increases appears to have blown over, although ongoing EA stagnation is not breaking resilient services inflation.
  • Dovish market expectations for the ECB’s March decision have also faded amid cyclically tight labour market and services inflation data. It should easily clear this hurdle without policy change while preserving the data-dependent option to cut in June or later.

By Philip Rush