Archive

HEW: Micro Risk Off

• Risk assets have suffered, despite decent Nvidia results suggesting AI demand hasn’t turned yet, and the macro data remaining resilient. Fears are more theme-specific.
• US labour market activity entered the shutdown solidly, and low jobless claims suggest it survived fine. Meanwhile, UK inflation only lost a little excess, and our forecast rose.
• Next week’s UK Budget is the lowlight of our week, but it may struggle to live up to all the noisy hype. Sneaky backloaded tax hikes will close the latest forecast hole again.

By Philip Rush

US: Resilient Into Shutdown

• US payroll data revealed resilience going into the US government shutdown, with jobs growth the strongest since April and annualising to a pace capable of plateauing growth.
• Surging labour force participation drove unemployment up in the least disappointing way, with the employment to population ratio making a contradictory improvement.
• Jobless claims suggest stability into the shutdown’s end, besides noisy federal claims. The FOMC may not get the evidence it needs to cut again in December. It may not exist.

By Philip Rush

UK Disinflationary Kool-Aid

• UK disinflation relied on smaller utility price hikes and only went as far as the 3.6% forecast before September’s dovish surprise. It does not mean a path to 2% lies ahead.
• A broad rebound in price increases took the annualised median impulse above 4% to average 2.5% over two months, or 3% on the year, as the underlying problem persists.
• The BoE’s December decision pivots around the Governor, who seemingly needs upside news to avoid delivering a cut, so this outcome preserves that riskily dovish course.

By Philip Rush

Indonesia Holds Rates as External Headwinds Intensify

• Bank Indonesia paused rate cuts at 4.75%, shifting focus from growth to rupiah stability. This outcome was no surprise to the consensus as external risks intensified.​
• Further easing depends on rupiah stabilisation, not inflation alone. Elevated term premia and expanded FX operations reflect caution.​
• Macroprudential incentives and FX measures aim to support growth while monitoring weak credit transmission after previous rate cuts.