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 LFS unemployment rate declined for the third consecutive month to 4.3%, contrary to expectations. The 8bp move was about 50:50 between underlying improvement and cohort effects.</li>
<li>Pay growth disappointed by holding at 2.1%. Some finance compensation was revised as a bonus, thereby setting up a normalisation lower in July.</li>
<li>
With unemployment now 0.2pp below the BoE’s NAIRU estimate and inflation pressures building on an already high profile, the MPC’s trade-off is only getting more uncomfortable.…</li>
</ul>


The LFS unemployment rate declined for the third consecutive month to 4.3%, contrary to expectations. The 8bp move was about 50:50 between underlying improvement and cohort effects.
Pay growth disappointed by holding at 2.1%. Some finance compensation was revised as a bonus, thereby setting up a normalisation lower in July.

With unemployment now 0.2pp below the BoE’s NAIRU estimate and inflation pressures building on an already high profile, the MPC’s trade-off is only getting more uncomfortable.…


FLASH: UK UR Falls Further Below BoE's NAIRU

FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

FX & Rates

Even though the Fed's QT starts gradually, the market may react to the prospect of it increasing in pace and resulting in a significant additional supply of bonds over the next two to three years.  ECB and BoJ QE may have delayed the impact of impending QT on yields, but the ECB is expected to begin to taper next year. Improving global growth confidence and strong equity markets, including emerging markets, may also contribute to higher global bond yields.  A renewed focus on US tax reform and calmer rhetoric on North Korea may further support US yields and the USD; in particular against JPY. The US rates curve remains relatively flat with less than two hikes priced in by end 2018, against the current FOMC dot plot for four.  The Fed may appear somewhat more reticent to hike. However, we see limited scope for a downward revision to its rate projections.  Recent evidence suggests that the labor market has tightened further, financial conditions remain easier than when they started hiking, and the weaker USD this year should help underpin its inflation outlook.  The market is still coming to terms with the message from the BoE that hikes are likely.  Positioning is still significantly short GBP and the BoE sees a weak GBP as the main culprit driving up inflation and the need to hike.

Even though the Fed's QT starts gradually, the market may react to the prospect of it increasing in pace and resulting in a significant additional supply of bonds over the next two to three years.  ECB and BoJ QE may have delayed the impact of impending QT on yields, but the ECB is expected to begin to taper next year. Improving global growth confidence and strong equity markets, including emerging markets, may also contribute to higher global bond yields.  A renewed focus on US tax reform and calmer rhetoric on North Korea may further support US yields and the USD; in particular against JPY. The US rates curve remains relatively flat with less than two hikes priced in by end 2018, against the current FOMC dot plot for four.  The Fed may appear somewhat more reticent to hike. However, we see limited scope for a downward revision to its rate projections.  Recent evidence suggests that the labor market has tightened further, financial conditions remain easier than when they started hiking, and the weaker USD this year should help underpin its inflation outlook.  The market is still coming to terms with the message from the BoE that hikes are likely.  Positioning is still significantly short GBP and the BoE sees a weak GBP as the main culprit driving up inflation and the need to hike.

Fed on the QT, Market Still Digesting the BoE Rate Guidance

<ul>
<li>UK CPI inflation surged to 2.9% y-o-y in August amid an unusually strong underlying impulse. At 2.86% to 2dp, the overall surprise to the consensus was not large, although it is 0.1pp bigger for me.</li>
<li>Upside news was concentrated in clothing and communication. The former appears to frontload the rebound from summer sales and subtracts from my September forecast. The latter was an extreme outlier, but is probably a level shock so I do not overlay persistence or payback assumptions here.</li>
<li>
The BoE will…</li>
</ul>


UK CPI inflation surged to 2.9% y-o-y in August amid an unusually strong underlying impulse. At 2.86% to 2dp, the overall surprise to the consensus was not large, although it is 0.1pp bigger for me.
Upside news was concentrated in clothing and communication. The former appears to frontload the rebound from summer sales and subtracts from my September forecast. The latter was an extreme outlier, but is probably a level shock so I do not overlay persistence or payback assumptions here.

The BoE will…


FLASH: UK Inflation Surges on Clothing and Comms

<ul>
<li>UK inflation looks likely to disappoint the consensus again in August, with the CPI and RPI inflation rates only rising to 2.7% and 3.7% respectively. The 2017 weight changes reduced the CPI’s August seasonal factor. Risks seem broadly balanced.</li>
<li>The LFS unemployment rate has declined for two consecutive months, but I don’t forecast another fall from 4.4% this month. Wage growth should increase, though, and I am 0.1pp above consensus on AWE inc-bonuses at 2.4% y-o-y 3mma.</li>
<li>
GBP weakness and energy…</li>
</ul>


UK inflation looks likely to disappoint the consensus again in August, with the CPI and RPI inflation rates only rising to 2.7% and 3.7% respectively. The 2017 weight changes reduced the CPI’s August seasonal factor. Risks seem broadly balanced.
The LFS unemployment rate has declined for two consecutive months, but I don’t forecast another fall from 4.4% this month. Wage growth should increase, though, and I am 0.1pp above consensus on AWE inc-bonuses at 2.4% y-o-y 3mma.

GBP weakness and energy…


UK Preview: Hawkish MPC, Soft Inflation, High Wages

<ul>
<li>
UK industrial data were mixed again in July, with manufacturing strong and the trade balance less bad, but energy and especially construction weighed heavily.
</li>
<li>For my forecast, IP strength dominates slightly owing to its higher weight in GDP. Maintaining July’s output level for the rest of the quarter would mean IP contributing 9bp to Q3 GDP growth and construction subtracting 7bp.</li>
<li>
Output data are tracking GDP growth nearer to 0.6% q-o-q than my already bullish 0.4% baseline, and the risks from…</li>
</ul>



UK industrial data were mixed again in July, with manufacturing strong and the trade balance less bad, but energy and especially construction weighed heavily.

For my forecast, IP strength dominates slightly owing to its higher weight in GDP. Maintaining July’s output level for the rest of the quarter would mean IP contributing 9bp to Q3 GDP growth and construction subtracting 7bp.

Output data are tracking GDP growth nearer to 0.6% q-o-q than my already bullish 0.4% baseline, and the risks from…


FLASH: UK Industry Mixed but More Supportive

United Kingdom

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FLASH: UK UR Falls Further Below BoE's NAIRU

The LFS unemployment rate declined for the third consecutive month to 4.3%, contrary to expectations. The 8bp move was about 50:50 between...

Phil Rush

Fed on the QT, Market Still Digesting the BoE Rate Guidance

Even though the Fed's QT starts gradually, the market may react to the prospect of it increasing in pace and resulting in a significant additional...

Greg Gibbs

FLASH: UK Inflation Surges on Clothing and Comms

UK CPI inflation surged to 2.9% y-o-y in August amid an unusually strong underlying impulse. At 2.86% to 2dp, the overall surprise to the...

Phil Rush

UK Preview: Hawkish MPC, Soft Inflation, High Wages

UK inflation looks likely to disappoint the consensus again in August, with the CPI and RPI inflation rates only rising to 2.7% and 3.7%...

Phil Rush

FLASH: UK Industry Mixed but More Supportive

UK industrial data were mixed again in July, with manufacturing strong and the trade balance less bad, but energy and especially construction...

Phil Rush

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