Archive

October 20, 2025
2025-10-20 credit_head.png

Credit Cockroaches Incubating

  • Write-downs at two regional banks follow the cockroaches of First Brands and Tricolor bankruptcies, and should not be dismissed as isolated idiosyncratic events.
  • Overly accommodative monetary conditions are stimulating markets to incubate cockroach eggs that may spawn as private credit malinvestment in the next recession.
  • It is too early for these eggs to hatch, aided by the warm support of further Fed rate cuts. So, risk assets will probably keep on rising in the void of economic data releases.

By Philip Rush

October 17, 2025
2025-10-17 EA_head.png

EA: Inflation Rises Briefly In The Fall

  • Inflation’s rise to a high 2.3% in September was confirmed in the final print, although some payback remains likely in October. We doubt it goes fully back to the target then.
  • Underlying inflation metrics were broadly stable again at about 2.5%, with little progress in most statistical measures for over a year.
  • There is little cause for alarm at this stage, so the ECB can keep waiting in a good place, but we still see a greater risk of hikes than cuts in 2026.

By Philip Rush

October 17, 2025
2025-10-17 HEW_head.png

HEW: Cockroaches Startle Pricing

  • Losses on bad and fraudulent US loans raise the risk that more cockroaches will emerge, nourished by monetary policy stimulating asset prices outside of recessionary regimes.
  • Market rates fell on this, while macro data didn’t offer direction as UK Q3 GDP kept tracking 0.2%, EA inflation was confirmed, and UK labour market data were mixed.
  • Next week’s UK inflation data should reveal a rise, with the CPI reaching 4%. Delayed US CPI data will provide a rare signal more relevant to the Fed’s likely decision to cut.

By Philip Rush

October 16, 2025
2025-10-16 UK_head.png

UK: Unseasonably Resilient In Q3

  • Slight growth in August sustains an above trend level of activity and is tracking to a 0.2% q-o-q pace for Q3, matching our forecast and the consensus, but disappointing the BoE.
  • The ongoing slowdown in service sector activity repeats residual seasonality that would leave a trough in two months, but there is slightly more resilience this year.
  • Policymakers shouldn’t react to statistical noise, and are unlikely to amid ongoing excesses in underlying inflation that a stabilising labour market wouldn’t break.

By Philip Rush

By country