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Consumers still living in fear of tariff-led price increases The slump in the University of Michigan measure of consumer sentiment to a three-month low of 58.6 in August, from 61.7, suggests that households remain very nervous about rising inflation in …
15th August 2025
Small rebound masks underlying weakness The small rebound in manufacturing sales in June will provide little relief, given that it barely offsets the weakness in April and May and the breakdown shows that US tariffs still have some sectors, namely motor …
GDP growth will slow again GDP growth rebounded more strongly last quarter than most had anticipated but we still expect a renewed slowdown over the coming quarters. The 0.3% q/q rise in Q2 GDP was stronger than the analyst consensus of 0.1% as well as …
An above-target gain in core PCE deflator, but mainly due to one component Most of the large upside surprise to core PPI in July was due to a head-scratching increase in margins for wholesalers and retailers. While the data still imply that the core PCE …
14th August 2025
This page has been updated with additional analysis since first publication. Strength in Q2 won’t last The unexpectedly strong 0.4% m/m rise in GDP in June (consensus and CE forecast 0.1%) and 0.3% q/q gain in Q2 are more likely to be due to a temporary …
RBA will shrug off the slight fall in the jobless rate The tick down in the unemployment rate in July is likely to keep the RBA on sidelines at its next meeting in September, but we still think the Bank will ultimately loosen policy a bit further than …
Wage growth will moderate towards 3% While wage growth was a touch stronger last quarter than the RBA had expected, we think it will moderate again before long and won’t prevent the Bank from easing policy much further. The 0.8% q/q rise in the wage price …
13th August 2025
Another narrative shift for the Fed There was another narrative shift for the Fed in the July CPI data, with tariff effects once again barely perceptible but a stronger gain in services prices pointing to another above-target gain in the core PCE …
12th August 2025
This page has been updated with additional analysis since first publication. Labour demand still cooling, but at a slower pace The further falls in payroll employment and job vacancies suggest that the labour market is still cooling, albeit only …
RBA will cut rates below 3% by mid-2026 The RBA endorsed market expectations of further easing when it lowered the cash today and we think the Bank will ultimately slash rates to 2.85%. The Bank’s decision to lower the cash rate from 3.85% to 3.6% was …
Labour market weakness justifies September rate cut The Labour Force Survey has once again made a mockery of the economist consensus, with the surprise 83,000 surge in employment in June followed by a 40,800 slump last month. We are now a bit more …
8th August 2025
Miran a good pick for the Fed President Donald Trump’s decision to nominate Stephen Miran to replace Adriana Kugler as Fed Governor, albeit only on a temporary basis to begin with, is a welcome surprise. Miran is currently the Chair of Trump’s Council of …
7th August 2025
For an updated and more detailed version of this analysis, click here . Rates cut to 4.00%, but BoE appears in no rush to cut again soon Although the Bank of England cut interest rates today by 25 basis points (bps), from 4.25% to 4.00%, it showed some …
The reciprocal tariffs that have taken effect overnight have resulted in a broad range of US tariffs on different countries. At one end sits China (effective tariff rate of 42%), and Brazil (35%), Switzerland (25%). At the other sits Mexico, Canada, and …
This page has been updated with additional analysis since first publication. House prices recovering, but the rebound won’t meet consensus expectations The rise in Halifax house prices in July provides another indication that the housing market is …
Subdued wage pressures need not delay BoJ tightening Although regular earnings growth has been struggling to gain momentum, we think it will do so before long. Accordingly, the data shouldn’t stand in the way of the Bank of Japan resume its tightening …
6th August 2025
Weak labour market bolsters the case for further easing With New Zealand’s labour market continuing to slacken in Q2, the RBNZ is all but certain push ahead with a 25bp cut at its meeting later this month. The 0.1% q/q fall in employment last quarter was …
Survey implies employment weakening, prices rising The ISM services survey highlights the challenges for the Fed in the coming months, with the activity and employment indicators weakening even as the prices paid index rose to a new cyclical high. The …
5th August 2025
Trade deficit edges higher amid continued export weakness The small deterioration in Canada’s goods trade balance in June was driven by a large one-off import of a module for an offshore oil project in Newfoundland. The deterioration may have reversed in …
Household consumption showing signs of life The strong pickup in household spending last quarter won’t keep the RBA from handing down a 25bp cut when it meets next Tuesday. Looking ahead, however, the data do suggest upside risks to our below-consensus …
Weak report will embolden the FOMC doves The muted 73,000 rise in non-farm payrolls in July, combined with large downward revisions to May and June as well as an uptick in the unemployment rate to 4.2%, will strengthen the case for those on the FOMC …
1st August 2025
This page has been updated with additional analysis since first publication. Recovering, but not off to the races The bigger-than-expected rebound in the Nationwide measure of house prices in July shows that the recovery in the housing market after the …
Not all doom and gloom The back-to-back GDP declines in April and May look slightly less concerning in light of June’s preliminary estimate showing a 0.1% m/m gain, suggesting the earlier weakness was partly a hangover from the export-led strength in the …
31st July 2025
Bank of Japan opening door for year-end rate hike The Bank of Japan sounded a bit more optimistic today and we’re sticking to our forecast that the Bank will resume its tightening cycle at its October. The Bank’s decision to leave policy settings …
Strong bounce in retail sales won’t keep RBA from cutting in August The solid pickup in retail sales in June doesn’t detract from the fact that goods spending across Q2 was rather lacklustre. That being the case, the data won’t stand in the way of the RBA …
Economy remains resilient in the face of higher US tariffs The rebound in industrial production in June confirms that Japan’s economy is shrugging off trade tensions and should prompt the Bank of Japan to revise up their forecasts for GDP growth at its …
Dissents are the best offence for Waller and Bowman The FOMC made only one major change to its policy statement this month, acknowledging that growth moderated in the first half of the year. While Governors Christopher Waller and Michelle Bowman both …
30th July 2025
Rates unchanged but slower growth beginning to raise concern The Bank of Canada kept interest rates unchanged at 2.75% for a third consecutive meeting today as it awaits greater clarity over the country’s future trading terms with the US. The …
Swings in net trade mask slower underlying growth The 3.0% annualised gain in second-quarter GDP overstates the economy’s underlying strength, as it was largely driven by a 30% slump in imports as pre-tariff stockpiling unwound. The more worrying …
Progress on disinflation will pave the way for an August cut With underlying inflation inching closer towards the mid-point of the RBA’s 2-3% target, the Board should have no qualms about handing down a 25bp cut next month. And with activity still weak …
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST on Thursday 31 st July. (Register here .) Households becoming …
29th July 2025
Signs of resilience underneath the headline weakness Ignore the large 9.3% m/m drop in durable goods orders in June, which reflects a reversal of May’s surge of aircraft orders from the Qatar Airways Boeing deal announced during President Trump's visit to …
25th July 2025
This page has been updated with additional analysis since first publication. We’ll be discussing the outlook for Bank of England, Fed and ECB policy in a 20-minute online Drop-In at 3pm BST on Thursday 31 st July. (Register here .) Disappointing end to Q2 …
Drop in sales reflects end of tariff front-running rather than marked downturn The flash estimate showing a solid rise in retail sales in June, paired with the recent rebound in consumer confidence, suggests the decline in sales in May was more a …
24th July 2025
This page has been updated with additional analysis since first publication. Upside risks to inflation continue to fade July’s flash PMIs paint a picture of the economy struggling to recover from a spring lull, a labour market that is still weakening and …
The trade deal with the US announced today removes a key downside risk to Japan’s economy. And while the potential resignation of PM Ishiba creates political risks, our conviction that the Bank of Japan will resume its tightening cycle before the end of …
23rd July 2025
This page has been updated with additional analysis since first publication. Good start to the year over and tax rises to come Despite the £3.6bn overshoot in June, public borrowing is still in line with the OBR’s forecasts for the first three months of …
22nd July 2025
Despite its gradualist approach, RBA will cut further than most expect Although the RBA judged that leaving rates on hold was the more prudent choice at its meeting earlier this month, it did signal that there was more easing in the pipeline. Our sense is …
RBNZ to cut further as inflation remains subdued With underlying price pressures remaining benign, the RBNZ is likely to loosen policy a bit further than most are anticipating. The 0.5% q/q rise in consumer prices last quarter was a touch softer than the …
21st July 2025
Sentiment remains weak but improving The small rise in the University of Michigan consumer sentiment index in July and further drop-back in inflation expectations shows that, while overall confidence remains weak, households are less worried than they …
18th July 2025
Overall outlook remains poor The pick-up in housing starts in June is less encouraging than first appears, as it is narrowly concentrated in both the volatile multifamily sector, and in the Northeast of the country. Single-family housing starts declined …
Price pressures remain firm, but tariff uncertainties could still delay next rate hike Underlying inflation remains elevated and is almost certain to overshoot the Bank of Japan’s forecasts. However, with trade tensions looming large over the economy, the …
Solid retail sales show consumer still in good shape The solid 0.6% m/m rise in retail sales in June and similar-sized gains in core (ex. autos) and control group sales should dispel any fears that overall consumer spending is faltering in response to …
17th July 2025
This page has been updated with additional analysis since first publication. Fallout not as big, but payroll employment still falling The fallout in the labour market from the hikes in National Insurance Contributions and the minimum wage is not as big as …
Labour market starting to turn The sharp rise in unemployment in June makes the RBA’s decision to leave rates on hold earlier this month look like a policy error. We’re increasingly convinced that the incoming data flow will prompt the Bank to cut rates …
Japan’s exports should soften a bit further While overall exports are still holding up well, those to the US are plunging and we think soft global demand will result in a further decline over the coming quarters. The 0.5% annual fall in export values was …
PPI brings slightly better news on core PCE inflation There were fewer signs of tariff effects in June’s PPI data, meaning our estimate for core PCE prices now points to a trivially smaller 0.27% m/m rise last month. While prices are rising at slower pace …
16th July 2025
This page has been updated with additional analysis since first publication. Unexpected rise in inflation probably won’t prevent further rate cuts The unexpected rise in CPI inflation from 3.4% in May to a 17-month high of 3.6% in June (consensus & BoE …
This webpage has been updated with additional analysis since first publication. Signs of tariff-induced price hikes still limited The 0.2% m/m rise in the core CPI in June indicates that the Fed’s preferred core PCE deflator rose by 0.3% last month, with …
15th July 2025
Underlying inflation too strong for July cut and September looking shaky too The above-target monthly gains in CPI-trim and CPI-median in June leave the three-month annualised pace of those averaged measures holding uncomfortably high at 3.5%, meaning the …
