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
US Economics Update Does the tripledemic pose a new economic threat? The worsening tripledemic of Covid, influenza and RSV is unlikely to have a significant impact on economic growth, but it could weigh on employment and hours worked over the next few months. 11th December 2022 · 2 mins read
US Economics Update Monetary Indicators Monitor (Oct.) Money growth has stagnated as the Fed’s monetary tightening ramps up, and, while bank loan growth remains robust, we expect it to fade in response to the lagged impact of higher rates and tighter... 8th December 2022 · 3 mins read
US Economics Update A tale of two labour markets The better-than-expected 263,000 gain in non-farm payroll employment suggests it’s still the best of times in the labour market but, digging below the surface, there are worrying signs that it could... 6th December 2022 · 4 mins read
US Economics Update Labour market conditions still easing gradually The further falls in job openings and voluntary quits in October indicate that labour market conditions are continuing to ease gradually, which should keep downward pressure on wage growth. 30th November 2022 · 2 mins read
US Economics Update Recession Watch (Nov.) Despite the recent resilience of the hard economic data, the most reliable forward-looking indicators suggest that a recession is unavoidable – our six-month ahead composite model puts the odds at... 28th November 2022 · 5 mins read
US Economics Update Fed's losses a political rather than policy problem The Fed’s mounting losses are an expected result of surging interest rates and will not prevent officials from continuing to tighten policy, nor will they require the Treasury to step in and... 8th November 2022 · 2 mins read
US Economics Update Higher rates curb demand for loans Higher interest rates have dramatically curbed the demand for home mortgages and auto loans, but there is only limited evidence of banks tightening lending standards, which suggests that they expect... 7th November 2022 · 2 mins read
US Economics Update Fed's Powell remains resolutely hawkish The Fed raised its policy rate by another 75bp today, to between 3.75% and 4.00%, but laid the groundwork in the accompanying statement for a downshift to a 50bp hike at the next meeting in mid... 2nd November 2022 · 3 mins read
