All things global macro with a specific focus on FX and Rates; views not that of my employer. Contributor: https://xitter.gq/t.co/7wBZ9uKYSA
London, England
Joined March 2018
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Strong upside surprise in NFP, printing at 165k, more than double the Cons f/c, with positive back revisions of 84k, and a drop in the Ue rate from 4.2% to 4.1%.
I say "surprise"... it isn't for anyone reading this month's surveys...
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"Midterm Record Set With 57 Million Early Ballots Cast" .... Now from memory, early mail-in ballots were bullish Democrats no?
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So the iShares Semi index is back just 1% above its pre-Anthropic low. So before massive CapEx commitments were bearish, now its bearish that the balance sheet ex-AI can't sustain these CapEx commitments?
Seems sentiment is close to rock bottom on this trade now...
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Walter wrecking peoples heads with some ludicrous impulse response estimates... n.b. Lagarde said yields are up ~35bps across the Eurozone
🇪🇺 ECB POLICYMAKERS SEE DEC RATE HIKE FOLLOWED BY PAUSE: SOURCES
NEW ECB STAFF ESTIMATES SHOW BOND YIELD RISE CUTTING GROWTH BY CUMULATIVE 100 BPS, INFLATION BY 90 BPS IN 2027-28 VS SEPT BASELINE: SOURCES
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Must say, I’m a bit puzzled by the drop in European yields…. Sure the ECB says underlying inflation broadly stable, no visible second round effects, but it’s the energy environment which matters, and here it had to acknowledge the upside risks and likelihood of 2nd round effects
So Lagarde seen stepping down on Feb 7th after the Feb 4th meeting (the first scheduled for next year), with a new President required for the Mar meeting and projections.
A decision over de Cos vs Knot is now expedited.
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*BURNHAM REAFFIRMS NO SNAP UK ELECTION IN NEXT 12 MONTHS
I thought before it was no election until 2029?
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I understand there is a lot of back-and-forth and model calibration to do, but taking market path of 10-days to Aug 19th is way too sympathetic for the economy.... has Brent peaking at below $100 and gas just above 150p/therm ... We're currently at $115 and 247p respectively.
A neat chart from Kallum putting this 3.9% increase into perspective. I agree with him that the number isn't as worrisome as the nominal level suggests, especially when you consider the inflation profile for 2027 which will see the NLW fall in real terms.
Here is a chart showing the planned increase versus all increases in the minimum wage since it was introduced in 1999 (with help from Claude).
Healey’s planned 3.9% rise is below the long-term mean of 4.8% (and 6.0% since 2016, when the National Living Wage was introduced) but close to the median of 4.1%.
At the margin, it will add to wage cost pressures and hence unemployment but should not have a broader impact on economic performance or inflation trends.
#ukbudget #healey #burnham
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Energy traders understandably bidding into the weekend given the escalation risk that has been touted throughout the week. This has led Brent above $115 and European Gas above €93, which is turning the screws on equities.
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The positive surprises from UK growth keep on rolling, with the Oct Composite PMI smashing expectations by rising from 52.0 to 53.1, with new orders and employment also picking up.
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Brent catching a bid this morning, rising over 3% to hit a fresh 5-month high above $112.50, following Houthi attacks on Saudi infrastructure and news that the US is planning another wave of Iran strikes post midterms.
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Expecting to see pricing of back-to-back BoE hikes this year rise above 50% following this mornings data and the ongoing bid in energy prices, which will be captured in the BoE’s conditioning path.