Archive

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.

EA: Unsatisfying disinflationary snack

• Slower food price inflation nibbled the EA rate down to 2.1% in October, while services increased to their fastest pace since April. Labour costs are still rising too fast.
• Underlying inflation metrics are broadly a bit beyond target, risking a slight overshoot in the medium term, but the median impulse is reassuring, weighed down by France.
• Energy prices are set to bump inflation around the target in 2026, averaging above the consensus in our view. The ECB would need tightness elsewhere to shift rates, though.

By Philip Rush