US Economics Update Powell testimony confirms higher peak in rates Fed Chair Jerome Powell confirmed today that interest rates are set to rise higher than we previously anticipated. But with most evidence still pointing to economic weakness and markedly lower... 7th March 2023 · 3 mins read
US Economics Update American protectionism and global fracturing While it is in America’s strategic interests to build stronger economic ties with allies to counter China’s growth, its protectionist tendencies could undermine those goals and blunt the effectiveness... 22nd February 2023 · 6 mins read
US Economics Update Recession or economic resurgence? The unexpected surge in payroll employment in January has led to claims of an economic resurgence that will force the Fed to keep hiking interest rates but, on balance, we still think the real economy... 8th February 2023 · 4 mins read
US Economics Update Tighter lending standards point to a weak H1 The surge in interest rates and tightening in credit conditions last year resulted in a broad-based plunge in loan demand in the fourth quarter. Most banks expect to continue tightening standards this... 7th February 2023 · 2 mins read
US Economics Update Fed still looking for a “couple” more hikes As expected following a blitz of speeches by officials ahead of the blackout window, the Fed raised its policy rate by a smaller 25bp, to between 4.50% and 4.75%, but tempered any hopes of a major... 1st February 2023 · 3 mins read
US Economics Update Fall in quits consistent with slower wage growth Despite the rebound in JOLTS job openings in December, voluntary quits fell slightly and point to a further moderation in both wage growth and PCE core services (ex housing) inflation. 1st February 2023 · 2 mins read
US Economics Update Recession Watch (Jan.) Our tracking models now suggest the economy is more likely than not to be in recession in three months’ time, supporting the message from the latest surveys and hard activity data that GDP is likely... 31st January 2023 · 5 mins read
US Economics Update Fed paying foreign banks & money market funds It’s well known that, with the yield curve inverting the Fed is now racking up losses, but what is less appreciated is that the higher interest payments it is making are going mostly to foreign banks... 30th January 2023 · 4 mins read
US Economics Update Fed returns to its 1990s reaction function The Fed’s hawkish transformation has been so marked that, if its forecasts are to be believed, over the next couple of years it would effectively be adopting the same reaction function last followed... 19th January 2023 · 5 mins read
US Economics Update Risk of debt ceiling crisis is rising Raising the federal debt ceiling later this year will require bipartisan compromise, most likely involving measures to reduce the budget deficit modestly. But a deal probably won’t be reached until... 17th January 2023 · 4 mins read
US Economics Update Recession still more likely than soft landing The apparent resilience of employment in December has boosted hopes that the US can avoid a recession, but we still think that is unlikely. Employment is a coincident indicator whereas the only... 9th January 2023 · 2 mins read
US Economics Update Recession Watch (Dec.) Our composite models continue to suggest that a recession this year is a near-certainty, with the implied odds of the economy being in recession in six months’ time and in one year’s time both above... 5th January 2023 · 5 mins read
US Economics Update JOLTS show labour market conditions still tight The latest JOLTS data suggest that labour market conditions remain quite tight and a lot more adjustment is needed to ensure that the drop back in price inflation to 2% will be sustained. 4th January 2023 · 2 mins read
US Economics Update The Fed strikes back Despite the increasingly compelling evidence that core inflation will fall sharply next year, the Fed doubled down on its hawkishness today. We now expect two 25bp hikes from the Fed next year, with... 14th December 2022 · 3 mins read
US Economics Update Wage growth slowdown to drive inflation even lower Despite some mixed signals in the recent data, we still expect the tentative easing of labour market conditions already seen to push wage growth lower soon, with that slowdown gathering pace as... 13th December 2022 · 2 mins read
