US Economics Update Fed’s new-found dovishness won’t prevent slowdown Even if the Fed has stopped hiking interest rates sooner than we originally envisaged, we doubt that will prevent a marked economic slowdown this year. After all, that dovishness was partly prompted... 5th February 2019 · 1 min read
US Economics Update Tighter lending standards point to further slowdown The Fed’s latest Senior Loan Officer Survey suggests the slowdown in business equipment investment and rate-sensitive consumer spending growth will worsen in the coming months. Loan demand has... 4th February 2019 · 1 min read
US Economics Weekly Fed capitulation won't prevent economic slowdown In a remarkable U-turn, the Fed appears to have abandoned plans to continue gradually raising interest rates it set out only six weeks ago. The markets unsurprisingly welcomed this dovish shift, but... 1st February 2019 · 1 min read
US Data Response ISM Manufacturing Index (Jan.) The rebound in the ISM manufacturing index in January provides further reassurance that economic growth has remained solid at the beginning of 2019. We still expect a combination of weaker global... 1st February 2019 · 1 min read
US Housing Market Update Mortgage rates to fall despite cut in Fed MBS holdings The reduction in MBS held on the Fed’s balance sheet is, for now, set to continue in 2019. But while the announcement of MBS purchases in late 2008 led to a sharp drop in mortgage rates, we don’t... 1st February 2019 · 1 min read
US Data Response Employment Report (Jan.) The 304,000 surge in non-farm payrolls in January was partly offset by a downward revision to the December gain, but still illustrates that economic growth remains solid and that the government... 1st February 2019 · 1 min read
Global Markets Update A dovish Fed won’t keep the US$ down if the S&P falls Although we expect the US federal funds rate to end 2020 lower than it is now, we don’t think that the dollar will decline this year. The reason is our bearish view of the global economy. 31st January 2019 · 1 min read
US Housing Market Data Response New Home Sales (Nov.) New home sales surged 16.9% m/m in November, but activity is likely to level off in 2019. While mortgage rates are set to drop back, a slowing economy will weigh on buyer sentiment, and that will keep... 31st January 2019 · 1 min read
US Economics Update "Patient" Fed will be cutting rates next year The dovish tone of the policy statement and press conference following today’s FOMC decision will reinforce expectations that the Fed is almost done raising interest rates. We think a sharp economic... 30th January 2019 · 1 min read
Energy Data Response US Weekly Petroleum Status Report US crude stocks edged up a touch, as inputs to refineries plunged. Product demand is holding up well for now, but we expect it to fall later in the year as the US economy slows. 30th January 2019 · 1 min read
US Economics Update Composition of the Fed’s balance sheet matters too With the “patient” Fed set to leave interest rates unchanged, attention has shifted to its plans for balance sheet normalisation. But focusing on the terminal size of the balance sheet misses an... 29th January 2019 · 1 min read
US Housing Market Data Response Case-Shiller House Prices (Nov.) House prices are on track to grow by 5% in 2018, down marginally from a rise of 6.3% in 2017. That gradual easing in price growth will continue, as housing demand flat lines on the back of a slowing... 29th January 2019 · 1 min read
US Economics Update Rising prime-age participation not all good news The increase in participation of those aged 25-54 is partly due to a structural decline in disability rates, but the more recent drop in fertility rates also appears to be playing a key role. That... 28th January 2019 · 1 min read
US Economics Weekly Fed likely to stick with “patient” mantra At next week’s policy meeting, the Fed is likely to reiterate its current mantra that it can be “patient” in waiting to hike interest rates. Admittedly, stock markets have recovered most of the losses... 25th January 2019 · 1 min read
US Housing Market Update Shutdown will lift delinquencies, but not foreclosures Households struggling to pay their mortgage thanks to the government shutdown will be offered forbearance. That won’t prevent a rise in the mortgage delinquency rate, but with back pay guaranteed it... 25th January 2019 · 1 min read
Energy Data Response US Weekly Petroleum Status Report US crude stocks jumped, after falling for the past two weeks, despite no change in production. That said, the large jump in production may not be repeated this year given low prevailing prices. 24th January 2019 · 1 min read
