In Reeves We Truss
Just how worried is the Gilt market about increased borrowing by the new Labour government? This chart from Simon French of 10 year UK yields versus a G7 average shows that the spread has been widening of late, suggesting there is a UK specific issue behind the rise in 10 year yields: The FT has been peppered …
The Two Weeks That Will Be (6th October 2024)
1. The UKThe Prime Minister has demonstrated his ruthlessness by ditching his Chief of Staff, Sue Gray, before even 100 days in office had been completed. It also demonstrates a surprising amount of pressure for a man who has just delivered an historic victory to his party. This does not bode well for the long term. Short …
The Two Weeks That Will Be (22nd September 2024)
1. The UKTeam BM is in Liverpool for the first Labour Party conference since the new regime took power. Away from the sideshow media tumult over free glasses and holidays, this will be the first real set piece moment for Rachel Reeves since she became Chancellor. She doesn’t want to pre-empt the OBR, obviously, for …
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The Two Weeks That Will Be (8th September 2024)
1. The USThe Fed will cut interest rates by 50bp on Wednesday 18th September. Or at least they will if Powell has anything to do with it (and the Fed is most certainly not a democracy). The arguments are lining up for him: the labour market is softening, the balance of risks to growth is shifting …
German State Elections
The Two Weeks That Will Be (26th August 2024)
1. VolatilityWe started our last monthly missive with the phrase “On Wednesday the Bank of Japan will hike interest rates“, which suggests that a Japanese rate rise was at the very least a known unknown. The record collapse and then recovery in Japanese stock markets in the wake of the interest rate decision was far more of a Black Swan-esque unknown …
Rachel Reeves: Starts As She Means To Go On
Not quite a month into the new job and Rachel Reeves couldn’t help but issue a statement that lays bare the budgetary battle to come. More than just a statement in fact – there is also a letter to the Chair of the OBR and a policy paper from the Treasury entitled “Fixing the Foundations: …
The Month That Will Be (29th July 2024)
1. The Central BanksOn Wednesday the Bank of Japan will hike interest rates, the Fed will be unchanged but signal a cut is coming in September, on Thursday the Bank of England will leave rates dovishly unchanged and on Tuesday 6th August the RBA will hike if the Australia CPI data released Wednesday is even a smidge above expectations. In short, this is not quite the dovish pivot from the world’s …
Co-Cohabitation
++ France is an accident waiting to happen. The European Commission warned its “debt sustainability analysis indicates high risk over the medium term”. It cannot be governed effectively and it faces severely challenging debt/deficit dynamics. There should be a higher risk premium on French assets ++ If only forming a government in France were as simple …
