Economics

Our detailed written analysis helps clients to understand when and why we have high conviction views.

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Inflation

Heteronomics runs an extremely detailed suite of inflation forecasting models to produce optimal projections for up to two years ahead. Unlike other economists, a "nowcast" of observed price changes augments already detailed bottom-up estimates and the medium-term top-down assessment. The outcome is independently recognised as one of the most accurate inflation forecasts.

Clients are updated weekly on how forecasts are evolving, and can enjoy a transparent explanation of any changes.

POLICY TRACKING

Nowcast

Measured inflation rates are sensitive to the type of promotions run by retailers on the day that prices are officially recorded. Observing price changes over the relevant period often provides insight into the official outcome about a month ahead of their release. We take great care to clean and align our proprietary data to achieve an optimal nowcast.

1-3 months

Some cost pressures transmit through the wholesale and producer prices. These short-term effects, among others, are formally addressed by Heteronomics in a bottom-up model of the seasonally adjusted inflation impulse, with robust low-level seasonal factors translating them into market-leading forecasts.

Up to 2yrs

Fundamental macro factors become increasingly relevant over longer horizons and need to be considered through a top-down model. Heteronomics uses a parsimonious system of equations working together as a proprietary medium-term macro model, which allows feedback effects to be appropriately incorporated into a fully consistent forecast.

Activity

The breadth and depth of activity indicators can sometimes seem overwhelming, and the time to understand the relevance of even just the conventional sources can be prohibitive. Finding alpha requires specialist knowledge of the biases and interrelationships, including with alternative sources. Heteronomics uses its wealth of experience to help clients see through all the noise to the true signals, and shares both the data and methods to support its conclusions.

POLICY TRACKING

Nowcast

Detailed analysis of the various releases for well over a decade means Heteronomics has an unrivalled ability to extract the real signal from all the noise. That directly feeds into the "nowcast", but as the launching off point for the rest of the forecast, it helps form a robust base for the wider macro outlook, including for monetary policy.

Supply-side

This often overlooked side is essential to interpreting developments and anticipating future trends. Unlike the woefully simplistic consensus view, insights are drawn from the fact that the factors of production differ from each other in ways that are significant. Features like productivity's persistent weakness have been anticipated as a result.

Macromodel

Accurate results are important to us, so we use a parsimonious system of equations that are designed to best-fit the data in a consistent and manageable way. By relaxing some conventionally bad assumptions in the process, Heteronomics often produces counter-consensus forecasts with a widely respected track-record of performance.

Data Services

Heteronomics is making a significant investment in its data services. New ways of consuming our expanding range of data and forecasts are coming soon.

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