UK
UK hard data surprised to the upside in June, but leading indicators still point to weak growth and poor momentum ahead. Monthly GDP rose 0.3% m/m, accelerating from a downwardly revised flat reading in May. The details were mixed. Services rose 0.4% m/m,…
MacroQuant recommends a slight underweight position in equities, and favors a below-benchmark duration stance in fixed-income portfolios. The model is very positive on the US dollar, neutral on gold, constructive on copper, and very bullish on oil.
A sidelined BoE confronted with weak growth and easing price pressures supports an overweight in UK gilts and an underweight in GBP. The BoE held rates at 3.75% for the fifth consecutive meeting. The 6-3 decision saw Mann, Greene, and Pill dissent in favor of…
The UK’s latest cost of living relief may lower measured inflation, but it risks worsening concerns about fiscal credibility. June CPI was cooler than expected, falling to a 15-month low at 2.6%. Yet, this is not a clean disinflation story. UK inflation has…
UK May/June employment data came in marginally above consensus, yet only point to a labor market stabilizing at a weak level. Payrolled employees fell by 4k in June, versus expectations for an 8k decline. Job vacancies were broadly flat, as were the…
UK May hard data surprised to the upside, but still pointed to weak growth and limited scope for further BoE tightening. Hard data refers to directly measurable activity such as production, employment, and spending. Monthly GDP rose 0.1% m/m after contracting…
The UK economy entered the latest energy shock with recessionary signals already flashing red. While the rise in energy prices is unlikely to rival the 2022 crisis, it could still have a disproportionate impact on growth as the economy was already weak.…
The equity bull market is getting long in the tooth. Bonds should perform well once economic growth begins to slow. The dollar will strengthen over the coming months before resuming its downtrend. While crude has likely found a near-term floor, we favor metals over energy in the long run.
Stay overweight gilts despite renewed political turmoil in the UK.
The Bank of England held rates at 3.75%, as expected; we remain overweight UK gilts on a 12-month horizon. The hold was a 7-2 decision, with the two dissenters favoring a hike. Those MPC members were concerned about second-round effects and pointed to…