Chief Economist, Heteronomics

Phil Rush

Chief Economist

Heteronomics

Heteronomics represents a different kind of economics. We believe analysis should delve into the details of what is really going on, rather than using overly simplistic assumptions to quick-sell stories. Independence from myopic institutional pressures allows us to focus on the realities underlying your asset allocation decisions, without the conflicts of the old market structures. Heteronomics targets the themes driving UK asset prices, offering the benefits of depth, independence and ultimately price.

UK-centric macro research

Macroeconomics

<ul>
<li>The UK’s rapid recovery phase ended in July with GDP only limping up by 0.1% m-o-m, despite output still languishing 2.4% below the pre-covid level. Only the most depressed sectors even expanded, with most of the economy slipping further from their peaks.</li>
<li>It is hard to find an optimistic angle, but seasonal factors may have distorted the recovery profile. We now track Q3 GDP growth at 1.4%, which is below our already gloomy forecast for H2 before any covid-related restrictions return.</li>
</ul>


The UK’s rapid recovery phase ended in July with GDP only limping up by 0.1% m-o-m, despite output still languishing 2.4% below the pre-covid level. Only the most depressed sectors even expanded, with most of the economy slipping further from their peaks.
It is hard to find an optimistic angle, but seasonal factors may have distorted the recovery profile. We now track Q3 GDP growth at 1.4%, which is below our already gloomy forecast for H2 before any covid-related restrictions return.


Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Technical Analysis

Further signs of USD weakness are coming through. The breaks on the DXY Index as well as the ones on key major currency pairs show that there is still more USD weakness to be seen before we might stabilise.

Further signs of USD weakness are coming through. The breaks on the DXY Index as well as the ones on key major currency pairs show that there is still more USD weakness to be seen before we might stabilise.

<ul>
<li>Retail sales crashed in July, and together with downwards revisions, depressed the consensus by about 4pp. Weakness was broad-based and does not indicate a rotation back to services as restaurant bookings also declined that month.</li>
<li>The pingdemic forced almost a million to isolate, with many more disrupted. Legal obligations still impact ~700k in mid-August as quarantine mandates rise with holidays. Households continue to signal disappointment by not expecting to share in the recovery.</li>
</ul>


Retail sales crashed in July, and together with downwards revisions, depressed the consensus by about 4pp. Weakness was broad-based and does not indicate a rotation back to services as restaurant bookings also declined that month.
The pingdemic forced almost a million to isolate, with many more disrupted. Legal obligations still impact ~700k in mid-August as quarantine mandates rise with holidays. Households continue to signal disappointment by not expecting to share in the recovery.


<ul>
<li>The unemployment rate declined to 4.7% in Jun-21 on surprisingly jobs-rich growth. That is 12bps better than we expected, despite previously surveyed cohorts reporting higher unemployment. Stalled population growth flatters the employment rate.</li>
<li>About 8% of employees either remain on furlough or off-payroll since covid-hit. The normalisation of work is slowing after previous easy wins on re-opening. We still expect the UR to rise in H2, contrary to the BoE’s bullish forecast.</li>
<li>Headline wage growth has now surged to its spuriously elevated peak and will subside rapidly as the base effects flip. Wage growth in H1 was under 1.5%, which is less an inflationary concern than the flat provisional productivity estimate for H1.</li>
</ul>


The unemployment rate declined to 4.7% in Jun-21 on surprisingly jobs-rich growth. That is 12bps better than we expected, despite previously surveyed cohorts reporting higher unemployment. Stalled population growth flatters the employment rate.
About 8% of employees either remain on furlough or off-payroll since covid-hit. The normalisation of work is slowing after previous easy wins on re-opening. We still expect the UR to rise in H2, contrary to the BoE’s bullish forecast.
Headline wage growth has now surged to its spuriously elevated peak and will subside rapidly as the base effects flip. Wage growth in H1 was under 1.5%, which is less an inflationary concern than the flat provisional productivity estimate for H1.


Founder

Olivier Desbarres

Exacting. Excellent. Exceeding. Exemplary.

4X Global Research

4X Global Research was founded in 2017 to provide institutional and corporate clients with the substantive research, high-quality analysis and thoughtful insight on Emerging and G20 economies and financial markets they need to make informed and timely decisions and gain an edge in their investments.

FX & Rates

Global FX volatility – as measured by the 5-day Standard Deviation (SD) in the daily percentage change in the spot (closing) price of a turnover-weighted basket of 32 major currency pairs against the US Dollar – remains depressed by historical standards.While global FX volatility rose slightly on 11th August to about 0.32 SD following the release of US CPI-inflation data, it is still well below its level one month ago (0.43 SD) and 10-year average (0.47 SD). Notably global FX volatility is at a similar level (0.30 SD) as it was in the run-up to the 16th June Fed meeting and release of a more hawkish FOMC “<a href="https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20210616.pdf" target="_blank" rel="noopener">dot-chart</a>”.Volatility versus the US Dollar in most of these 32 developed and EM currencies has either fallen in the past month from already modest levels or been broadly stable. Volatility in the high-yielding Brazilian Real and low-yielding Canadian Dollar, Czech Crown, Norwegian Krone and Hungarian Forint has fallen the most in absolute terms. However, there have been a few notable exceptions, including the Turkish Lira, Thai Baht and Chilean, Colombian and Philippines Pesos.USD/THB volatility has risen further in past month and is now near top end of its admittedly narrow 12-month range. The Baht has been choppy against a strong US Dollar, resulting in the Baht NEER appreciating 1.4% since the multi-year low recorded on 6th August.GBP/EUR volatility is currently at its lowest level since early June. Sterling’s appreciation against the Euro has been slow and steady, in line with our expectations. Volatility in global FX (and the S&amp;P 500) also remains very modest compared to volatility in other asset classes, notably US Treasuries and Brent crude oil (see Figure 5). Most of the price action has been in the US rates market in recent months, perhaps unsurprisingly given protracted debate about the timeline for Fed tapering and rate hikes.There are a number of factors behind this low transmission from US rates to Dollar crosses and equities but, as was the case in late-2019, FX markets are ultimately pricing in very little risk of policy, macro data or geopolitical surprises, in our view.

Global FX volatility – as measured by the 5-day Standard Deviation (SD) in the daily percentage change in the spot (closing) price of a turnover-weighted basket of 32 major currency pairs against the US Dollar – remains depressed by historical standards.While global FX volatility rose slightly on 11th August to about 0.32 SD following the release of US CPI-inflation data, it is still well below its level one month ago (0.43 SD) and 10-year average (0.47 SD). Notably global FX volatility is at a similar level (0.30 SD) as it was in the run-up to the 16th June Fed meeting and release of a more hawkish FOMC “dot-chart”.Volatility versus the US Dollar in most of these 32 developed and EM currencies has either fallen in the past month from already modest levels or been broadly stable. Volatility in the high-yielding Brazilian Real and low-yielding Canadian Dollar, Czech Crown, Norwegian Krone and Hungarian Forint has fallen the most in absolute terms. However, there have been a few notable exceptions, including the Turkish Lira, Thai Baht and Chilean, Colombian and Philippines Pesos.USD/THB volatility has risen further in past month and is now near top end of its admittedly narrow 12-month range. The Baht has been choppy against a strong US Dollar, resulting in the Baht NEER appreciating 1.4% since the multi-year low recorded on 6th August.GBP/EUR volatility is currently at its lowest level since early June. Sterling’s appreciation against the Euro has been slow and steady, in line with our expectations. Volatility in global FX (and the S&amp;P 500) also remains very modest compared to volatility in other asset classes, notably US Treasuries and Brent crude oil (see Figure 5). Most of the price action has been in the US rates market in recent months, perhaps unsurprisingly given protracted debate about the timeline for Fed tapering and rate hikes.There are a number of factors behind this low transmission from US rates to Dollar crosses and equities but, as was the case in late-2019, FX markets are ultimately pricing in very little risk of policy, macro data or geopolitical surprises, in our view. 

Low Global FX Vol: Maturity or Complacency?

United Kingdom

The British Pound Sterling is the official currency of The United Kingdom. 

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

GBP (GBPUSD CURNCY)

UK: RIP Rapid Recovery

The UK’s rapid recovery phase ended in July, despite output languishing 2.4% below peak. Only the most depressed sectors even expanded, with most...

Phil Rush

Fresh USD Breaks

Further signs of USD weakness are coming through against major currencies. These all suggest there is still more USD weakness to be seen at least...

Shyam Devani

UK: Retail Crashes into Pingdemic

The pingdemic crashed UK consumption in July and legal obligations still impact almost as many in mid-August. Households continue to signal...

Phil Rush

UK: Jobs-Rich First Half to 2021

The unemployment rate declined to 4.7% in Jun-21 on surprisingly jobs-rich growth. Wage growth in H1 was under 1.5%, which is less an inflationary...

Phil Rush

Low Global FX Vol: Maturity or Complacency?

Global FX vol is low by historical standards and relative to vol in US Treasuries, and for good resason. But FX markets are pricing in very little...

Olivier Desbarres

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)