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>UK unemployment continued to decline after furlough. Activity levels are low and falling, but the 4.1% UR implies capacity as tight as when the BoE hiked to 0.5% in Nov-17.</li>
<li>A hike in Feb-22 now appears likely, barring imminent news. Vacancies and wage growth have fallen back to 2019 levels, supporting the Bank rate’s return to 0.75% later this year. </li>
<li>The cautious policy outlook in 2019 carried the gradual and limited mantra, contrary to current fears of aggressive tightening.</li>
</ul>


UK unemployment continued to decline after furlough. Activity levels are low and falling, but the 4.1% UR implies capacity as tight as when the BoE hiked to 0.5% in Nov-17.
A hike in Feb-22 now appears likely, barring imminent news. Vacancies and wage growth have fallen back to 2019 levels, supporting the Bank rate’s return to 0.75% later this year. 
The cautious policy outlook in 2019 carried the gradual and limited mantra, contrary to current fears of aggressive tightening.


<ul>
<li>Despite assistance from a falling labour force, the UK unemployment rate’s decline was the least since the spring. </li>
<li>Ongoing public sector job creation struggles to keep raising employment levels during frictions around furlough’s end. Labour demand appears to remain high into the omicron threat. </li>
<li>Lost revenue and uncertainty should constrain pay settlements, allowing the BoE to hike on a gradual path in 2022 after what we still expect to be another unchanged outcome. </li>
</ul>


Despite assistance from a falling labour force, the UK unemployment rate’s decline was the least since the spring. 
Ongoing public sector job creation struggles to keep raising employment levels during frictions around furlough’s end. Labour demand appears to remain high into the omicron threat. 
Lost revenue and uncertainty should constrain pay settlements, allowing the BoE to hike on a gradual path in 2022 after what we still expect to be another unchanged outcome. 


<ul>
<li>UK output growth disappointed again as it slowed to 0.1% m-o-m. Growth is entirely driven by government spending while most private sectors are contracting.</li>
<li>The return of activity restrictions will weigh on the recovery over the winter. That has long been part of our forecast but will cut into optimism elsewhere. </li>
<li>We still expect the BoE to resist hiking in Dec-21 and take a more gradual path next year.</li>
</ul>


UK output growth disappointed again as it slowed to 0.1% m-o-m. Growth is entirely driven by government spending while most private sectors are contracting.
The return of activity restrictions will weigh on the recovery over the winter. That has long been part of our forecast but will cut into optimism elsewhere. 
We still expect the BoE to resist hiking in Dec-21 and take a more gradual path next year.


<ul>
<li>Covid cases have been rising rapidly with the seasonal change, leading to a return of activity restrictions, consistent with our long-held view.</li>
<li>We believe the breadth and intensity of measures are likely to become more severe through the winter. The omicron-variant lends its name to the known risk of a vaccine-evasive strain.</li>
<li>The risk-minimising political reaction function may tighten far more. The BoE should resist hiking into this, lest it compounds pains excessively. </li>
</ul>


Covid cases have been rising rapidly with the seasonal change, leading to a return of activity restrictions, consistent with our long-held view.
We believe the breadth and intensity of measures are likely to become more severe through the winter. The omicron-variant lends its name to the known risk of a vaccine-evasive strain.
The risk-minimising political reaction function may tighten far more. The BoE should resist hiking into this, lest it compounds pains excessively. 


<ul>
<li>UK retail sales increased for the first time in six months, helping start Q4 surprisingly strongly. The composition was encouragingly consistent with the desirable sort of rotation. </li>
<li>Widely reported supply chain disruption may have brought forward some Christmas purchases, driving the clothing and games surges. </li>
<li>Front-Loading could weigh on growth into yearend, but our warning signal for disappointing consumption has faded.</li>
</ul>


UK retail sales increased for the first time in six months, helping start Q4 surprisingly strongly. The composition was encouragingly consistent with the desirable sort of rotation. 
Widely reported supply chain disruption may have brought forward some Christmas purchases, driving the clothing and games surges. 
Front-Loading could weigh on growth into yearend, but our warning signal for disappointing consumption has faded.


UK 2Y (GUKG2 INDEX)

UK: Labour Market Keys Open BoE Doors

UK labour market activity levels are low and falling, but the UR's fall to 4.1% implies capacity as tight as when the BoE hiked to 0.5% in Nov-17....

Phil Rush

UK: Less Resilience Before Restrictions

The UK unemployment rate’s decline has slowed while public sector job creation exaggerates strength. Omicron should constrain pay settlements...

Phil Rush

UK: Output Struggles Before Restrictions

UK output growth disappointed again as most private sectors contracted. The return of activity restrictions will weigh on the recovery over the...

Phil Rush

Covid: Winter Arrives with a Chill

Covid cases have been rising with the seasonal change, leading to a return of restrictions, consistent with our view. The BoE should resist hiking...

Phil Rush

UK: Christmas Comes Early for Retail

UK retail sales increased for the first time in six months with encouraging composition. Supply chain concerns may have brought forward some...

Phil Rush