DM Government Bond Markets in Limbo

May 27, 2026 12:22 PM UTC

·       DM central bank meetings in June will be crucial, with a high risk of a 25bps ECB hike to warn against 2nd round effects from higher oil prices and a BOJ 25bps hike as part of the ongoing normalisation.  However, the tone that the Fed’s Warsh will set will also be key.  The bigges

Preview: Due May 28 - U.S. April Personal Income and Spending - PCE Prices to underperform CPI

May 27, 2026 12:16 PM UTC

We expect April’s core PCE price index to rise by 0.3%, with overall PCE prices up by 0.5%, both slightly below respective CPI outcomes of 0.4% and 0.6%. We expect a 0.3% rise in personal income to underperform a 0.5% rise in spending, but due to lower taxes disposable personal income may outperfo

EZ HICP Preview (Jun 2): Headline To Surge Again as Core Starts To Rise?

May 27, 2026 9:23 AM UTC

While somewhat important, the May flash HICP data is unlikely to have a material impact on ECB thinking, irrespective of whichever way it may surprise.  Most likely the data will show a further and still largely energy driven rise of 0.4 ppt, matching the April gain, but now to a 32-mth high of 3.4

Europe: Anti-Immigration Vs More Negative Demographics

May 22, 2026 8:12 AM UTC

 A significant demographic tremor is gaining speed and breadth - globally. Just as politics – certainly in the west - is framed around ending or at least reducing and controlling immigration, it seems that the populists at the helm of such thinking are not considering the ramifications of such a

Eurozone: PMI Slump Shows Energy Surge Constraining Activity, Not Just Hitting Costs

May 21, 2026 8:36 AM UTC

Once again surprising on the downside flash Eurozone Composite PMI fell to 47.5 in May from 48.8 in April and below the 50.0 no-change mark for the second successive month. The latest reading thereby signalled a further and steeper m/m reduction in business activity, was the sharpest since October 2

FOMC Minutes from April 29: Hawkish concerns appear broadly felt

May 20, 2026 6:54 PM UTC

FOMC minutes from April 29 show a hawkish leaning, confirming market perceptions that there was more interest in removing an easing bias from the language than revealed by the three hawkish dissents at the meeting. Should inflation remain persistent, tightening could come onto the agenda, though sho

ECB: Not the Only Game in Town – But A Time for Hair Shirts?

May 19, 2026 11:22 AM UTC

When hearing ECB Council policy thinking one can get the impression that it sees only a direct link from changes in its policy rate to inflation rather than the latter succumbing to a range of factors, this being the transmission mechanism.  Most important of course is the economic damage that chan

Middle East Conflict: U.S. Helping Chinese Whispers?

May 15, 2026 11:26 AM UTC

 In hosting President Trump this week, China feels it is vying, if not achieving, parity with the U.S. as the world’s superpowers; from China’s perspective, it regards Russia similarly.  It does seem as if China’s goal at this summit was to get more effective flexibility in shaping Taiwan’

Preview: Due May 28 - U.S. April Personal Income and Spending - PCE Prices to underperform CPI

May 14, 2026 3:26 PM UTC

We expect April’s core PCE price index to rise by 0.3%, with overall PCE prices up by 0.5%, both slightly below respective CPI outcomes of 0.4% and 0.6%. We expect a 0.3% rise in personal income to underperform a 0.5% rise in spending, but due to lower taxes disposable personal income may outperfo

U.S. April Retail Sales - Ex auto and gasoline still showing underlying resilience

May 14, 2026 1:01 PM UTC

April retail sales with a rise of 0.5% overall, 0.7% ex autos and 0.5% ex autos and gasoline are in line with expectations, and while likely to be marginally negative overall in real terms the ex autos and gasoline data suggests continued consumer resilience. Initial and continued claims have both p

U.S. April CPI - Subdued ex food, energy and what looks like one-time strength in shelter

May 12, 2026 1:08 PM UTC

April CPI is only marginally stronger than expected on the core rate, up by 0.4%, 0.376% before rounding, and the data not alarming outside of a one-time distortion in housing. The headline gain of 0.6% was as expected, and here the rise was a little firmer at 0.64% before rounding.

U.S. April Employment - Resilience should keep easing off the near term agenda

May 8, 2026 1:04 PM UTC

April’s non-farm payroll suggests the US economy continues to grow at a respectable pace in early Q2 with no signs of a hit from the oil shock yet. Payrolls increased by a stronger than expected 115k, with unemployment stable at 4.3% and the workweek stronger at 34.3 hours from 34.2. Average hourl

Eurozone: In Dire Straits?

May 8, 2026 10:55 AM UTC

Amid all the concern about the energy-induced surge in inflation resulting from the Middle East conflict, the impact on EZ real economy looks to be sizeable and growing.  High profile PMI numbers are flashing alarmingly, but the message from the April composite (at a 17-mth low) may actually be not

Straits of Hormuz Scenarios

May 7, 2026 6:25 AM UTC

·       Our new baseline (70% probability) is for the Straits of Hormuz to start to partially reopen by June/July based on a framework deal between Iran and the U.S.  This means more elevated oil prices in Q2, but then a gradual reduction in WTI to USD85 end-2026 and USD75 end 2027.  The al

U.S. April ISM Services, March Job Openings, New Home Sales - Economy growing moderately

May 5, 2026 2:25 PM UTC

The latest round of data provides no major net surprises, with a modest decline in job openings, two straight moderate increases in new home sales and a modest slowing in the ISM services index. The data is consistent with an economy still showing moderate growth.

U.S. Labour: In Praise of Older Workers

May 5, 2026 8:32 AM UTC

·       While financial pressures are prompting U.S. workers to delay retirement and work longer, this is not being realized due to deteriorating health/labour market skills mismatches and other issues. More work from older workers is unlikely to be the solution to shrinking net immigration.

RBA Review: Last Hike for Now?

May 5, 2026 5:14 AM UTC

The RBA March meeting hike rates to 4.35% on a 8-1 vote
Forward guidance seems to signal last hike for now

ECB Review: ECB Mixed Communications

April 30, 2026 2:01 PM UTC

·       Overall, the June and July meetings have live risks that the ECB could undertake a modest 25bps hike.  If a partial reopening of the Straits of Hormuz occurs then the ECB will likely keep hawkish, but not actually hike.  We feel that the ECB is overestimating natural gas prices, whi

Eurozone GDP & HICP Review: Fragile Resilience?

April 30, 2026 9:30 AM UTC

We continue to be critical of the ECB assertion (at least before the Iran War) that the EZ economy was in a ‘good place’.  This to us was too backward looking and amid some signs in both hard, soft and monetary data, that the economy going into the last quarter was soft and fragile.  Indeed, f

FOMC - Easing call moved to December from September

April 29, 2026 7:58 PM UTC

The Fed is now entering a transition from Chairman Powell to Chairman Warsh, who looks set to be in place at the next meeting on June 17. The final meeting of Powell’s term saw three hawkish dissents on the language and Powell announce he will continue as Governor after his term as Chair ends. We

FOMC keeps rates on hold but three of four dissents are hawkish

April 29, 2026 6:23 PM UTC

The main surprise in the FOMC statement was the number of dissents, one dovish, Miran continuing to call for a 25bps easing, and three hawkish, with Hammack, Kashkari and Logan in agreement with the decision to leave rates unchanged but objecting to the inclusion of an easing bias.

Preview: Due April 30 - U.S. March Personal Income and Spending - Core PCE Prices to outperform core CPI

April 29, 2026 1:26 PM UTC

March’s personal income and spending data may be overshadowed by the Q1 GDP report due at the same  time and to which it will contribute.  We expect a 0.9% rise in personal spending, to exceed both a 0.2% rise in personal income and a 0.7% rise in PCE prices. For core PCE prices, we expect an in

Big EM: Diverging Fiscal Trends

April 28, 2026 12:35 PM UTC

·       EM government bond spreads are controlled as 2nd round inflation effects are likely to be less than 2022, due to less buoyant domestic demand/slacker labour markets and less global supply chain pressure ex oil/oil products.  Brazil is expected to cut rates and others will likely not