Archive

HEW: Markets Making Opinions

• The falling USD and surging precious metals prices don’t fit the fundamental narratives of lazy strategists seeking to extrapolate moves into spurious trends.
• Macro developments have been relatively benign, with resilient real activity shown in euro area GDP and surveys. Looser conditions pose upside risks to UK shelter prices.
• Next week’s ECB and BoE decisions are set for no change rate outcomes, and we expect that will also broadly apply to guidance. We still expect no more cuts from either bank.

By Philip Rush

MAS Pivots to Tightening Path

• MAS holds S$NEER policy unchanged while raising 2026 core inflation forecasts to 1.0-2.0% vs 0.5-1.5% prior. This inflation normalisation creates scope for future band steepening if wage pressures materialise.​
• Growth resilience and rising unit labour costs shift the outlook hawkishly. A positive output gap persists, and upside inflation risks from wages/geopolitics favour policy tightening over 2026.
• A July steepening is likely if Q2 data confirms momentum: Current settings risk a 2%+ inflation trajectory incompatible with the price stability mandate without adjustment.

EA: Goldilocks In The Good Place

• Surveys of output in the Euro area are converging on a core narrative of resilience, with the ESI the highest in almost three years and broadly shared among member states.
• Price expectations have fallen for businesses in the consumer goods sector, but this isn’t because of weak demand. Retailers are most optimistic about sales in four years.
• Less uncertainty about better growth is bullish, but not hawkish, amid a disinflationary shock. The ECB should enjoy being in a good place, like Goldilocks, without the bears.

By Philip Rush

Riksbank Pauses in Turbulent Times

• The Riksbank holds its policy rate at 1.75% as expected, with an unchanged outlook, supporting growth and 2% inflation target amid a resilient economy.
• ​Krona strength and VAT cuts heighten downside inflation risks, potentially prompting rate cuts over hikes if pressures persist into 2026.
• ​Geopolitical shocks raise uncertainty, but the vigilant Riksbank is prepared to adjust rates if US tariffs erode Swedish growth and sentiment rapidly.