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 BoE MPC voted to keep all its policy levels unchanged in May, although Chief Economist Andy Haldane dissented in favour of lowering the gilt purchase target by £50bn. That would effectively mean terminating purchases in Aug-21 instead of Nov-21.</li>
<li>Forecast revisions raise GDP and squash the unemployment rate. Potential GDP matches the demand upgrade to maintain an economic balance in 2yrs when inflation is also seen at target. Tweaked guidance removes the apparent dovish near-term bias.</li>
<li>Gilt purchases have been tapered, as we expected, to stretch them until November. A return of restrictions and failure to recover GDP may yet prompt another extension.</li>
</ul>


The BoE MPC voted to keep all its policy levels unchanged in May, although Chief Economist Andy Haldane dissented in favour of lowering the gilt purchase target by £50bn. That would effectively mean terminating purchases in Aug-21 instead of Nov-21.
Forecast revisions raise GDP and squash the unemployment rate. Potential GDP matches the demand upgrade to maintain an economic balance in 2yrs when inflation is also seen at target. Tweaked guidance removes the apparent dovish near-term bias.
Gilt purchases have been tapered, as we expected, to stretch them until November. A return of restrictions and failure to recover GDP may yet prompt another extension.


<ul>
<li>There is a growing optimistic consensus that many households will treat the pandemic impact on savings as a windfall to spend. Falling annuity rates offset the effect of rising assets for retirement income, although that has partly unwound recently.</li>
<li>The post-pandemic policy toolkit presents new risks that household balance sheets need to reflect through more housing services and a higher precautionary savings buffer.</li>
</ul>


There is a growing optimistic consensus that many households will treat the pandemic impact on savings as a windfall to spend. Falling annuity rates offset the effect of rising assets for retirement income, although that has partly unwound recently.
The post-pandemic policy toolkit presents new risks that household balance sheets need to reflect through more housing services and a higher precautionary savings buffer.


<ul>
<li>The SNP has used Brexit as a pretext for a second independence referendum request, but the new realities of UK-EU relations fundamentally change the debate.</li>
<li>If a clear majority of MSPs elected to the new Scottish Parliament on 6 May favour independence, the perceived risk premium around indyref2 is likely to rise.</li>
</ul>


The SNP has used Brexit as a pretext for a second independence referendum request, but the new realities of UK-EU relations fundamentally change the debate.
If a clear majority of MSPs elected to the new Scottish Parliament on 6 May favour independence, the perceived risk premium around indyref2 is likely to rise.


<ul>
<li>Inflation disappointed expectations again in Mar-21 as it only increased to 0.7% y-o-y on the CPI and 1.5% on the RPI, although the latter was precisely in line with our forecast (index at 296.9). Food and recreation prices were the main sources of weakness.</li>
<li>The CPI outlook seems slightly softer than we previously thought. Further increases remain likely, aside from a July blip, with the peak slightly over 2% in Nov-21. Subdued median inflation suggests underlying pressures are not reflating excessively.</li>
</ul>


Inflation disappointed expectations again in Mar-21 as it only increased to 0.7% y-o-y on the CPI and 1.5% on the RPI, although the latter was precisely in line with our forecast (index at 296.9). Food and recreation prices were the main sources of weakness.
The CPI outlook seems slightly softer than we previously thought. Further increases remain likely, aside from a July blip, with the peak slightly over 2% in Nov-21. Subdued median inflation suggests underlying pressures are not reflating excessively.


UK: Subdued Reflation Pressures in Mar-21

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Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

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Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Buy DXY 91 to 90.50 overshoot to a align with the SPX top of the rising wedge near 4,180 for a peak in risk. Late April is the ideal timeline for a USD low base to form as a rally platform for a risk off cycle in May/June.Expect some key lows for the USD in EM to pressure EM equities in coming months. USD in Asia bearish tactically into targeted lows to reverse positioning to long the USD.

Buy DXY 91 to 90.50 overshoot to a align with the SPX top of the rising wedge near 4,180 for a peak in risk. Late April is the ideal timeline for a USD low base to form as a rally platform for a risk off cycle in May/June.Expect some key lows for the USD in EM to pressure EM equities in coming months. USD in Asia bearish tactically into targeted lows to reverse positioning to long the USD.

United Kingdom

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

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BoE: Activist Leaves the Hawkish Roost

Haldane dissented to lower the gilt purchase target by £50bn. Forecast revisions raise GDP and squash the unemployment rate. Guidance removes the...

Phil Rush

UK: Saving the Precautionary Motive

Falling annuity rates offset the rise in savings for retirement incomes. The policy toolkit presents new risks that household balance sheets need...

Phil Rush

UK: Election Raising Indyref2 Risk

If a majority of MSPs elected to the new Scottish Parliament on 6 May favour independence, the perceived risk premium around indyref2 is likely to...

Phil Rush

UK: Subdued Reflation Pressures in Mar-21

Further UK inflation increases remain likely, aside from a July blip, with the peak slightly over 2% in Nov-21. Subdued median inflation suggests...

Phil Rush

USD Buy Levels to Sync with Peak in Risk

Buy DXY 91 to 90.50 overshoot to a align with the SPX top of the rising wedge near 4,180 for a peak in risk. Late April is the ideal timeline for a...

Thomas Schroeder

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