Author Archive

Still moderate US inflation

CPI inflation in January moderated to 1.6% y-o-y, from 1.9% in December (and versus 2.4% on average over the past twelve months). The biggest driver of this moderation was the sharp drop in global oil prices; given recent oil movements, we estimate that headline inflation could slide towards 1% y-o-y in coming months. Excluding energy […]

US jobs report shows recession risk is limited

US employment rose by a solid 304,000 in January (+1.9% year on year, y-o-y), compared with 222,000 in December. The three-month average was a healthy 241,000/month. Meanwhile, the ISM manufacturing survey rose to a robust 56.6 in January from 54.3 in December. Overall, these two pieces of data suggest that US macro momentum remains strong […]

Review of the Federal Reserve’s January meeting

Dovishness was on full display at the Fed meeting on 30 January. The Fed removed its rate tightening bias, and emphasised its “patience” until the next rate move. Chairman Powell seemed particularly anxious about the global growth backdrop and explained the more dovish stance is just “common sense risk management”. Another key focus was the […]

US macro and Federal reserve forecast update

We are reducing our 2019 US growth forecast to 2.2%, from 2.4% previously, mostly to account for the partial government shutdown. New York Fed president John Williams has stated that the impact of the shutdown could reach 1% of Q1 GDP. Despite the lower forecast, we remain confident about the underlying fundamentals of the US […]

UK politicians remain stuck in the mire

The British parliamentary vote on Theresa May’s EU divorce deal will be on 15 January. The deal is likely to be rejected, as there has been little progress since December, when a first vote was called off for lack of support. The problem is that there remains no majority for any alternative. If there is […]

Outsized rise in rates charged on US credit cards

The Fed’s interest-rate tightening since Q4 2015 has had divergent repercussions on interest rates paid by ‘end users’ across the US economy. Interest rates on credit card debt have risen particularly sharply since the start of Fed tightening. How monetary policy is transmitted to the ‘real economy’, including consumers and small businesses, remains a blind […]

Fed’s New Year Resolution: Listen to markets

Fed Chairman Jerome Powell made dovish remarks at a conference on Friday to the effect that the Fed would be ‘patient’ about further rate increases after having delivered four rate hikes in 2018. Crucially, Powell mentioned possible tweaks to the Fed’s preset plans for balance sheet shrinkage to calm financial markets concerns, after downplaying the […]

December’s Federal Reserve meeting review

The Federal Reserve (Fed) raised the Fed funds target range (FFTR) by another 25 basis points (bps) on 19 December, as widely anticipated. The new FFTR range is 2.25-2.50%. This marked the fourth rate increase of 2018. There was no formal guidance about the next hike and clues were rather hazy. It seems like the […]

Federal Reserve December meeting preview

The Federal Reserve (Fed) is widely expected to increase the Fed funds target range (FFTR) by another 25 basis points (bps) on 19 December, marking the fourth rate increase of 2018. This increase would push up the new FFTR range to 2.25%-2.50%. The focus will be on the rate guidance for 2019, including the one […]

Stagnant US trucker wages raise questions about macro theory

Despite a huge shortage of drivers and soaring transportation costs as a result, wages in the US haulage sector have remained stuck. This illustrates the ongoing chasm between macro theory (which would suggest much stronger wages) and reality (still-tepid wage growth). While microeconomic dynamics specific to the sector might be at play (beyond the scope […]

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