EZ HICP Review: Services Inflation Still Resilient But Core Goods Soften Further

January 7, 2026 10:44 AM UTC

HICP inflation has been range bound for the last 5-6 months between 2.0% and 2.2% with the November and October numbers in the middle of that range. And it stayed in that range falling to 2.0% in the December flash numbers, albeit where adverse rounding pre vented a fall to 1.9%.  We see this as th

U.S. December CPI - Moderate rebound from weak November leaves a subdued Q4

January 13, 2026 2:09 PM UTC

December’s CPI has come in slightly softer than expected, not showing a strong rebound from the weak 2-month change in November and thus leaving a subdued Q4. December CPI rise by 0.3% as expected but with the core rate weaker than expected at 0.2%, 0.24% before rounding. CPI ex food, energy and s

German HICP Review: Headline and Core Down Afresh

January 6, 2026 4:25 PM UTC

Germany’s disinflation process resumed with a bang as December saw a larger-than-expected fall in both headline and core inflation.  Indeed, the headline HICP fell 0.6 ppt to a five-month low of 2.0%.  This was largely food and energy driven but still with some fall in core at least according to

January 29, 2026 4:23 PM UTC

We expect January’s non-farm payroll to rise by 85k overall and by 80k in the private sector, which would be on the firm side of trend and could be even more so after what could be substantial negative historical revisions. However, we expect unemployment to rise to 4.5% from 4.4%. We expect avera

Venezuela: Oil and Geopolitics

January 5, 2026 12:02 PM UTC

·       Venezuela’s oil production will likely take years to increase substantively due to poor infrastructure, the need for substantive investment, and a lack of democratic political stability.  In terms of geopolitics, operations in Venezuela reinforce the Trump administration’s pivot

UK GDP Preview (Jan 15): Underlying and Headline Economy Fragility Continues?

January 8, 2026 11:13 AM UTC

As we have underlined, UK GDP has hardly moved since March and this became even clearer with the last (October) GDP release, the question being whether weakness is getting more discernible and significant.  Indeed, it has fallen in three of the last four months of data (Figure 1) and where we see n

Bessent: New Fed Inflation Range and Dropping Dots?

January 2, 2026 11:30 AM UTC

U.S. Treasury Secretary Bessent over the Christmas period suggested that the Fed should shift to targeting an inflation range and drop the quarterly dots.  What impact would this have? Such a change would give the Fed more flexibility on the margin, but not significant.  This could make communicat

FOMC Pauses With Risks Seen Diminished

January 28, 2026 8:33 PM UTC

The FOMC has left rates unchanged at 3.5-3.75% as expected, with two dissents for a 25bps easing. The statement takes a slightly more optimistic view of the economy than the last one in December. We continue to expect two 25bps easings this year, coming in June and September.

December Outlook: Turbulent Times

January 2, 2026 8:10 AM UTC

Our December Outlook is now published and please see all our economic and policy chapters below.  

Markets 2026

January 6, 2026 9:58 AM UTC

•    For financial markets, the muddle through for global economics and policy provides support for risk assets, combined with solid earnings prospects from some of the magnificent 7.  However, U.S. equities are once again significantly overvalued and we look for a 5-10% correction in 2026, b

USD Hurt by Hedging More than Asset Outflows

January 27, 2026 10:53 AM UTC

The Greenland drama  and fears of BOJ/Fed Intervention on USDJPY has put the USD under renewed downward pressure against DM Currencies.  What happens next?  Overall, we see scope for further USD decline versus DM currencies in 2026 on more currency hedging; some diversification away from the U.S.

Bank of Canada - Rate Level Still Appropriate But Uncertainty Heightened

January 28, 2026 4:42 PM UTC

The Bank of Canada left rates unchanged at 2.25% as expected and continues to see the current policy rate as appropriate, Governor Macklem stating updated economic forecasts have not changed significantly since October. However in highlighting heightened uncertainty the statement appears to leave ri

Taiwan: Worst Case Consequences

January 13, 2026 3:26 PM UTC

·        The most likely option for China is to continue the air and naval grey zone warfare around Taiwan, combined with support for pro-China factions in Taiwan’s parliament to build pressure for reunification at some stage before 2049 (the 100th anniversary of the communist party).  Wi

Maximum Trump

January 12, 2026 9:55 AM UTC

·       Overall, though Trump action can cause volatility in financial markets, the major issues remain the performance of the U.S. economy and whether the current scale of AI optimism will remain.  Monthly TICS data since the April reciprocal tariffs show that global investors continue inwa

U.S. December Employment - Non-Farm Payrolls disappoint but Unemployment down

January 9, 2026 2:26 PM UTC

December’s non-non-farm payroll at 50k is marginally softer than expected, and a net negative given a substantial net downward revision of 76k to October and November, with the bulk of the revision coming in October when the government shutdown made measurement more challenging. Unemployment howev

Trump’s Problems

January 28, 2026 8:35 AM UTC

Overall, the Trump administration’s hyperactive start to 2026 is unlikely to achieve success on the number one issue for voters in the shape of cost of living concerns.  Meanwhile ICE’s immigration tactics in Minnesota are causing concerns among swing voters, though Trump geopolitical adventuri

ECB Steady Signals, But

January 19, 2026 8:55 AM UTC

•    We remain of the view that financial conditions and lending rates are worse than the current ECB depo rate level suggest and means that 2026 EZ growth does not really pick-up.  Combined with a mild undershoot in inflation, this can build the case for the ECB to deliver two 25bps cuts.  

Preview: Due January 13 - U.S. December CPI - Soft November probably understates true picture

January 6, 2026 2:17 PM UTC

We expect gains of 0.3% in both December overall and ex food and energy CPI, with the gains being close to 0.3% even before rounding. There is extra uncertainty over this release as it is unclear whether the surprisingly soft data for November, after a missing October, represented a slowing in trend

U.S. Q4 GDP now seen at 3.1% rather than 3.6% after wider November trade deficit

January 29, 2026 6:58 PM UTC

Following today’s wider trade deficit for October, the Atlanta Fed has revised its Q4 GDP estimate down to 4.24% from 5.4%. We have revised our estimate to 3.1% from 3.6%. We are assuming a December deficit only marginally narrower than November’s, and significantly wider than October’s. 

U.S. Personal Income underperforming Spending, Core PCE Prices maintaining trend

January 22, 2026 3:31 PM UTC

The personal income and spending report for both October and November has been released and shows healthy spending, up by 0.5% in each month outperforming income which rise by 0.1% in October and 0.3% in November. PCE prices, both overall and core, rise by 0.2% in each month, modest, but stronger th

FOMC Preview for January 28: No change with early 2026 data awaited

January 22, 2026 6:42 PM UTC

The FOMC meets on January 28 and rates look set to be left at 3.5-3.75%, and while rates are likely to move lower in 2026, they are unlikely to give many hints over what is likely in March, with future decisions dependent on data. The FOMC will not update its economic forecasts or dots at this meeti

AI and U.S. Productivity

January 5, 2026 8:04 AM UTC

·        Structural labor and overall productivity will be boosted if current AI adoption is sustained at a pace quicker than the adoption of the internet.  However, not all areas of the U.S. economy are exposed to AI benefits, as manual work can only be replaced by humanoid robots with maj