Iran War: Invasion Risks

March 31, 2026 10:55 AM UTC

·       Any ground-based invasion would likely result in a long war and Iran would likely counter with attacks on energy or other key facilities around the Gulf.  Sea and air based invasions are also difficult, while any victory would likely be followed by occupation.  WTI oil prices would

Markets: Short vs Long Iran War

March 30, 2026 8:00 AM UTC

·       For a 4-8 week war and 3-4 quarters of energy price normalisation, we see a 10% U.S. equity market correction in H1 2026 driven by the current Iran war and/or consumption slowing due to lower (real) wage growth, alongside still stretched valuations in equity and equity-bond terms.  T

Continuum Economics Calendar April 2026

March 27, 2026 2:30 PM UTC

Data and Events Calendar April 2026.

March Outlook: Iran War and AI Challenges

March 26, 2026 7:17 AM UTC

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

DM FX Outlook: The Rest of 2026

March 25, 2026 7:55 AM UTC

Our baseline is for a 4-8 week Iran war, with WTI down to USD80-85 by June; USD65-70 end 2026 and USD60 by Q3 2027. This should see the USD return to a weaker profile later in the year. In our December Outlook, our favorites were the AUD and NOK based on yield spreads, but it is also worth noting th

UK CPI Review: Goodbye to the Good Old Days?

March 25, 2026 7:33 AM UTC

After January’s clear fall, even in the core rate, where the headline CPI rate fell from December’s 3.4% to 3.0% (a 10-mth low) it stayed there in February’s numbers – matching both consensus and BoE projections.  Services fell 0.1 ppt to 4.3% which was a four-year low (Figure 1) but the co

DM Rates Outlook: Mixed Policy Rate and Yield Paths

March 24, 2026 8:46 AM UTC

·        The multi quarter outlook for DM rates depends on the length of the Iran war Our baseline is that it will be a 4-8 week war (here) and a 3-4 quarter retracement of oil prices back to pre-war levels – longer from Europe and Asian gas prices. We forecast WTI down to USD80-85 by June

Western Europe Outlook: Economies Slip on Oil

March 24, 2026 8:00 AM UTC

·       In the UK, even without the Middle East impact we were suggesting a sub-consensus 2026 GDP picture which now has even greater downside risks attached.  Our baseline is for 4-8 week war and a reversal of oil prices over 3 quarters. The BoE has a symmetric stance between 2nd round effe

Outlook Overview: Iran War and AI Challenges

March 23, 2026 4:39 PM UTC

·       The Iran war macro impact depends on length of the conflict and impact on energy flows. Our baseline is for a 4-8 week Iran war, with WTI down to USD80-85 by June; USD65-70 end December and USD60 by Q3 2027 (here).  The jump in oil and gas prices mean at least a temporary increase in

Equities Outlook: Navigating Cyclical and Structural Forces

March 23, 2026 4:15 PM UTC

·        For global equities, our baseline (here) is for a 4-8 week Iran war, with WTI down to USD80-85 by June; USD65-70 end 2026 by June and USD60 by Q3 2027.  A fragile situation will mean it will take until 2027 for energy prices to return to pre-war levels. On a multi-quarter basis thi

Iran War Scenarios Updated

March 23, 2026 3:04 PM UTC

·       Our central scenario remains a 4-8 week war in Iran. Trump’s loathing of long wars and high gasoline prices will likely prompts the U.S. to declare victory.  A formal ceasefire is unlikely, but the end of hostilities could see an informal understanding of the Straits of Hormuz for

BoE Review: A Fragile MPC Truce?

March 19, 2026 12:59 PM UTC

Very clearly, the BoE kept rates on hold with no dissents as it understandably waits for more information about the length, breadth and repercussions of the Iran war.  The individual MPC member statements (as expected) showed diverging views as to the extent and reaction of what are now unfolding r

UK CPI Preview (Mar 25): The Calm Before the Storm?

March 17, 2026 8:53 AM UTC

Although most aspects of the January CPI came in a notch above BoE thinking, there was still a clear fall even in the core rate.  Indeed, the headline CPI rate fell from December’s 3.4% to 3.0% (a 10-mth low) and we see it staying there is February’s numbers - as do BoE projections.  Services

UK GDP Review: More Gloom?

March 13, 2026 7:41 AM UTC

Fresh downside surprises were the story from the January GDP numbers.  Expectations that the economy would enjoy a further successive rise, thereby providing the best three-month showing in two years were dashed as GDP instead stagnated.  Weakness was broad-based but most evident in private servic

BoE Preview (Mar 19): MPC Agree to Disagree?

March 12, 2026 2:35 PM UTC

The rate cut that seemed partly flagged by the narrow vote against easing in early February now looks highly unlikely this month. Indeed, it is also likely that the four who dissented in favor of cutting last time around will vote with the majority in favour of no change.  But while the MPC as a wh

Gulf Countries U.S. Investment Deals Risks

March 9, 2026 8:05 AM UTC

·       Lower budget revenue and a multi-year hit to tourism and the Gulf role as air transit hubs, could see delays and reduction in some parts of the Gulf states USD3.4 trillion deals with the Trump administration. The economic effects on the U.S. would likely be small and the geopolitics b

UK GDP Preview (Mar 13): Were Things Getting Better?

March 4, 2026 11:11 AM UTC

Belatedly, some good news; the UK economy grew for a second successive month in December, something not seen for almost a year.  Even more encouragingly, it may very well enjoy a further rise in the looming January data, thereby providing the best three-month showing in two years.  But as is famil

Markets and the Iran War

March 4, 2026 9:50 AM UTC

•    The Trump administration’s objective appears to be pivoting from regime change to hurting Iran ballistic missile capabilities, which argues for a 2-4 week war rather than a prolonged war.  However, the most intense missile battles will likely occur in the next one week and markets are

Continuum Economics Calendar March 2026

February 26, 2026 1:00 PM UTC

Data and Events Calendar March 2026.

GBP: Foreign Investor Flows

February 23, 2026 11:05 AM UTC

·       Inbound inflows into the UK have been solid in the last few years attracted by yield pick-up and fiscal consolidation for gilts and cheap comparable valuations in UK equities. UK BOP data suggests something would have to go really wrong to stop inbound portfolio flows e.g. UK recessio

UK CPI Review: Fresh and Marked Fall Resumes as Core Slips to Cycle-Low?

February 18, 2026 10:03 AM UTC

Although most aspects of the January CPI came in a notch above BoE thinking, the clear fall in the headline rate and further looser labor market messages still point to a BoE rate cut next month, not least given the likely return to the 2% target by April. These projected falls started with these Ja

UK Labor Market: Job Losses Weighing on Wages

February 17, 2026 7:52 AM UTC

There are further signs that the labor market is haemorrhaging jobs both clearly and broadly with fresh and deep falls in the more authoritative measure of jobs covering payrolls.  Indeed, private sector payrolls are still falling, down almost a full ppt in y/y terms and more steeply so (Figure 1).

UK GDP Review: Underlying Economy Fragility Does Continue

February 12, 2026 7:52 AM UTC

First the good news; the UK economy grew for a second successive month in December, something not seen for almost a year.  But as is familiar with recent UK real economy data, there is a negative flip side with the 0.1 m/m December advance negated by downward revisions to previous figures (November

UK Gilt Vigilantes and Politics

February 11, 2026 9:05 AM UTC

•    The Gilt market is sensitive to the prospect that Starmer/Reeves could be replaced, resulting in some changes to the fiscal rules in the scanario of a new PM/Chancellor.  Further fiscal rule refinement could be possible, but a new PM would want a political reset and this would likely pre

UK CPI Preview (Feb18): Fresh and Marked Fall to Resume as Core to Hit New Cycle-Low?

February 10, 2026 11:35 AM UTC

UK policy makers may not be able to say they have won the war against inflation, but a clear victory may be seen in the batter likely in the next few months with a likely return to the 2% target by April These projected falls are likely to commence with the looming January numbers (Figure 1) where a

EUR/USD: Europe’s Counter Threats to Trump

February 10, 2026 11:05 AM UTC

·       Europe is highly unlikely to weaponize its existing portfolio holdings or new flows into the U.S., as Europe is dependent on the U.S. nuclear umbrella and as EZ/EU decision making is slow and modest in action.  Such a move would be strongly opposed by EZ/European investors. Even so,

BOE March Cut and Then More

February 5, 2026 1:25 PM UTC

·       Six members of the MPC appear worried about the disinflationary impact from a weak economy and four of whom actually voted for a 25bps cut at the February meeting.  BOE Bailey and Mann, looking at the MPC minutes, are very close to voting for a rate cut, which suggests high confidenc

UK GDP Preview (Feb 12): Underlying Economy Fragility Continues?

February 5, 2026 11:21 AM UTC

Even given the surprisingly solid November GDP release, this merely returns the level of GDP to where it was in June, albeit briefly as for the latter.  Partly undermined by wet and warm weather through the month, we see no change on the December figure, in m/m terms (Figure 1), thus no reversal of

U.S. Inflows: Portfolio Dominates

February 4, 2026 12:05 PM UTC

·        Portfolio flows have dominated U.S. C/A financing looking at the breakdown of the balance of payment data (BOP), with no material slowdown in 2025 from foreign investors. U.S. investors did accelerate buying of overseas equities but this was counterbalanced by slower U.S. buying of

Europe Nuclear Weapons; NATO and Greenland

February 3, 2026 11:05 AM UTC

·        Without the U.S. nuclear weapon umbrella, Europe’s nuclear deterrent is too weak. Secondly, European countries are highly reliant on U.S. missile defense, command, intelligence and reconnaissance, which military experts estimate could take 10 years to replace. Major European count

Markets: Profit-Taking or More?

February 2, 2026 9:22 AM UTC

•    For now we see some further profit-taking on risky positions in gold/silver/copper/equities and short USD positions.  However, a bigger macro catalyst is required to produce a deep correction in equities and major risk off.  The nomination of Kevin Warsh for Fed chair is unlikely to be

BOE Preview: Clues From February 5

January 30, 2026 8:05 AM UTC

·       No change is expected at the Feb 5 BOE meeting, with communications leaving the door open to further interest rate cuts at a slower pace than 2025. However, we still forecast three 25bps cuts in 2026 to 3.00%, with the first likely arriving at the key April 30 meeting. The UK labor ma

Continuum Economics Calendar February 2026

January 29, 2026 4:00 PM UTC

Data and Events Calendar February 2026.

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.

UK: More BOE Easing and Politics/Fiscal Policy

January 16, 2026 11:55 AM UTC

•    The BOE will likely deliver more rate cuts than discounted by money markets and we forecast three 25bps cuts in 2026 to 3.00%. The UK labor market is weak enough to prompt further wage inflation and underlying inflation slowdown, while fiscal policy is tightening multi-year.  
•    

DM Government Debt: 2026 Supply & Voters’ Resistance To Fiscal Consolidation

January 14, 2026 11:55 AM UTC

·        We see the most persistent issue being supply (budget deficit + QT) in 2026, which should lessen into 2027 with a slowdown in ECB/BOE QT and a partial U turn by the BOJ.  However, governments are also struggling with electorates that are resistant to higher taxes or lower governmen

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

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

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

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.  

December Outlook: Turbulent Times

December 22, 2025 8:10 AM UTC

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

Continuum Economics Calendar January 2026

December 19, 2025 12:00 PM UTC

Data and Events Calendar January 2026.

Western Europe Outlook: Underlying Price Pressures Ebbing

December 19, 2025 9:34 AM UTC

·       In the UK, we have upgraded 2025 GDP growth by 0.1 ppt to 1.3%, but pared back that for next year by a two notches to a very sub-par 0.6%. We think the weak(er) labor market will accentuate somewhat refreshed disinflation allowing the BoE to ease further in 2026 by around 75 bp to 3.0

DM FX Outlook: Scope for USD decline against JPY, AUD and NOK

December 18, 2025 2:31 PM UTC

·       Bottom Line: We expect some modest USD losses across the board over the next couple of years, but there is much more scope for losses against the JPY, AUD and NOK than the other G10 currencies, as yield spreads have moved dramatically in favour of these currencies, and the currencies

December 18, 2025 12:41 PM UTC

That the BoE delivered a sixth 25 bp rate cut (to an almost three-year low of 3.75%) was hardly in doubt.  But we were surprised that amid the recent run of weak data, that there were (again) four dissents with Governor Bailey switching sides.  Notably, in a clear combative overtone, at least some

DM Rates Outlook: 2026 Yield Curve Steepening Before 2027 Flattening

December 17, 2025 9:21 AM UTC

·       Multi quarter, we still look for 50bps of further Fed easing by end 2026, which will likely initially bring 2yr yields down to 3.35%.  However, once the Fed Funds rate get closer to 3.0-3.25% and the assumed slowdown turns into a soft landing, the 2yr will likely move to a premium ve

Outlook Overview: Turbulent Times

December 17, 2025 7:44 AM UTC

·        The U.S. slowdown remains in focus as the lagged effects of President Trump’s tariff increases continues to feedthrough, though our baseline is for a 2026 soft-landing.  The Supreme court will likely rule against part of Trump’s reciprocal tariffs, which will create short-term

UK CPI Review: Down More Than Expected from Likely Peak?

December 17, 2025 7:38 AM UTC

A clear downside surprise adds to the wealth of data suggesting a reining of price and cost pressures.  This November result makes it more likely that the September CPI outcome will prove to be the CPI inflation peak.  Indeed, although October figure fell a little less than the consensus by 0.2 pp

UK Labor Market: Job Losses Weighing Even More Clearly on Wages

December 16, 2025 8:06 AM UTC

Adding to the array if weak activity updates of late, there are increasing signs that the labor market is haemorrhaging jobs more clearly and broadly with fresh and deeper falls in the more authoritative measure of jobs covering payrolls.  Indeed, private sector payrolls are still falling, down alm