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 intensified inflation squeeze has created pressure on the government to ease the burden. After blaming Russia, the Chancellor confirmed a temporary fuel duty cut.</li>
<li>More substantive changes to personal taxation served to negate some of the pain from the recent national insurance hikes, leaving middle-income workers to take the load.</li>
<li>A £70bn drop in gilt sales for 22-23 is helpful now the BoE’s bid has gone. An indicative reversal beyond doesn’t sit easily with BoE hopes for active asset sales.</li>
</ul>


The intensified inflation squeeze has created pressure on the government to ease the burden. After blaming Russia, the Chancellor confirmed a temporary fuel duty cut.
More substantive changes to personal taxation served to negate some of the pain from the recent national insurance hikes, leaving middle-income workers to take the load.
A £70bn drop in gilt sales for 22-23 is helpful now the BoE’s bid has gone. An indicative reversal beyond doesn’t sit easily with BoE hopes for active asset sales.


<ul>
<li>The BoE delivered a third back-to-back rate hike in March to 0.75%. However, Jon Cunliffe surprisingly dissented against a change now.</li>
<li>Some modest tightening “might be appropriate in the coming months”, consistent with another hike in May. The BoE now notes “risks on both sides of that judgement”. </li>
<li>We still expect a slower tightening pace (quarterly) beyond May as rates get closer to neutral (1.5%) and the peak passes in inflation pressures.</li>
</ul>


The BoE delivered a third back-to-back rate hike in March to 0.75%. However, Jon Cunliffe surprisingly dissented against a change now.
Some modest tightening “might be appropriate in the coming months”, consistent with another hike in May. The BoE now notes “risks on both sides of that judgement”. 
We still expect a slower tightening pace (quarterly) beyond May as rates get closer to neutral (1.5%) and the peak passes in inflation pressures.


BoE: Rates Hit Third Base During Home Run

<ul>
<li>The UK unemployment rate fell by 11bps to 3.9% as the labour force shrunk enough to offset stagnant employment levels. Gaps are more critical to monetary policymakers.</li>
<li>Unemployment is closing in on the BoE’s 3.8% forecast for Q1, historically consistent with the Bank rate at 0.75%, supporting another 25bps hike in March.</li>
<li>Wage settlements are responding to the tight market and inflation driving real terms declines. That should encourage additional rate hikes this year.</li>
</ul>


The UK unemployment rate fell by 11bps to 3.9% as the labour force shrunk enough to offset stagnant employment levels. Gaps are more critical to monetary policymakers.
Unemployment is closing in on the BoE’s 3.8% forecast for Q1, historically consistent with the Bank rate at 0.75%, supporting another 25bps hike in March.
Wage settlements are responding to the tight market and inflation driving real terms declines. That should encourage additional rate hikes this year.


<ul>
<li>UK GDP rebounded by 0.8% m-o-m to reach a record high level in Jan-22. Activity broadly brushed off the lingering covid restrictions.</li>
<li>We raise our Q1 GDP growth forecast by 0.1pp to 1.1%. Changing to that would be substantial for the BoE (0%) and consensus (0.6%), supporting another rate hike.</li>
<li>Growth slows more later in our forecast as the real income squeeze mounts. Painfully high core inflation underlying that means it is far from a dovish development.</li>
</ul>


UK GDP rebounded by 0.8% m-o-m to reach a record high level in Jan-22. Activity broadly brushed off the lingering covid restrictions.
We raise our Q1 GDP growth forecast by 0.1pp to 1.1%. Changing to that would be substantial for the BoE (0%) and consensus (0.6%), supporting another rate hike.
Growth slows more later in our forecast as the real income squeeze mounts. Painfully high core inflation underlying that means it is far from a dovish development.


Fixed Income and Currency Strategist

Gautam Jain, PhD, CFA

FX & Rates

<ul>
<li>In my monthly recap note, I provide a performance update of my trade recommendations in emerging markets FX and rates.</li>
<li>Of the total of 35 trade recommendations made so far, I have recommended closing 25 of which 18 were in the money.</li>
<li>I also update my views on the open trade recommendations and go over the rationale behind those that I closed recently.</li>
</ul>


In my monthly recap note, I provide a performance update of my trade recommendations in emerging markets FX and rates.
Of the total of 35 trade recommendations made so far, I have recommended closing 25 of which 18 were in the money.
I also update my views on the open trade recommendations and go over the rationale behind those that I closed recently.


Alpha Bites: Performance Summary of Trade Recommendations in FX and Rates – March 2022

United Kingdom

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

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UK: Budget from Russia with Love

New tax changes negate some of the pain from national insurance hikes, leaving middle-income workers to take the load. A fleeting drop in gilt...

Phil Rush

BoE: Rates Hit Third Base During Home Run

The BoE hiked again in March with a fourth back-to-back step on track for May. We still expect a slower tightening pace (quarterly) beyond May as...

Phil Rush

UK: Labour Market on a Tight Track

The UK unemployment rate fell to 3.9% on a falling labour force. Wage settlements are responding to the tight market and inflation. That should...

Phil Rush

UK: Output Brushes-Off Covid in Jan-22

We raise our Q1 UK GDP growth forecast by 0.1pp to 1.1% - that would be a big rise for the BoE (0%) and consensus (0.6%), supporting another hike....

Phil Rush

Alpha Bites: Performance Summary of Trade Recommendations in FX and Rates – March 2022

I provide a performance update of all my trade recommendations along with discussing the open trades. I have closed 25 of the 35 trades recommended...

Gautam Jain, PhD, CFA

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)