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ECB hawks restate case for 75bps hike next month

Emily Nicol
Chris Scicluna
  • German inflation likely rose in September to a new high due principally to the expiration of the Summer discounting measures but also the ongoing upwards trend in food prices
  • But Spanish inflation fell back much more than expected due principally to lower electricity prices
  • Commission survey likely to add to evidence of loss of euro area growth momentum at the end of the summer

 

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Deserved criticism of UK fiscal policy continues

Chris Scicluna
Emily Nicol
  • German and French consumer confidence plunges to record lows; German income expectations also slump to the lowest since the series began in the early 1990s
  • US pending home sales could buck the recent downwards trend in August, while goods trade deficit might well worsen amid a rebound in imports of consumer goods

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Sterling slumped to a record low

Chris Scicluna
Emily Nicol
  • While far more stable than Gilts, Italian spreads widen after right-wing coalition on track for majorities in both houses of parliament
  • Japanese flash PMIs flag ongoing challenges
  • Flash euro area inflation estimates (due Friday) expected to report that the headline HICP rate jumped in September

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UK consumer confidence slumps to series low

Chris Scicluna
Emily Nicol
  • The flash euro area PMIs are set to imply contraction in economic activity at the end of Q3
  • GfK consumer confidence survey suggests that UK households have never been so downbeat
  • UK government set this morning to deliver a mini-budget and present its new growth strategy of unfunded tax cuts
  • Sunday’s Italian election to place populist nationalist Meloni at head of right-wing coalition

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BoJ maintains ultra-accommodative policy

Chris Scicluna
Emily Nicol
  • As expected, the SNB raises rates by 75bps to leave the BoJ the only central bank with a negative policy rate
  • BoE set to raise rates today by at least 50bps and confirm the start of active Gilt sales later this month
  • Fed hikes by 75bps as expected, but signals a higher terminal fed funds rate than previously suggested, above 4½%

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