Daily Brief Macro: UK Excess Inflation Expectations and more

• The upwards trend in consensus inflation forecasts reflects persistent excess effective expectations supporting wages amid policymakers’ failure to re-anchor at the target.
• Easing on the assumption of success predictably negated the required conditions, so we forecasted the problem. Nonetheless, expectations were also stickier than we assumed.
• Without renewed progress, wage growth should keep trending above the BoE’s forecast, discouraging further rate cuts. Hikes may even be needed in 2026 to break excesses.

• revised Fed call expects easing in September with four consecutive cuts
• ECB in data watching mode, final cut expected in October
• Sweden may see lower growth due to trade war impact, inflation to decrease in the autumn, risk of falling below 2% next year. Norway has solid growth outlook, inflation above two and a half percent, minimal exposure to trade war.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Dollar index has been consolidating for the last two months, leading to uncertainty
• Conditions for dollar bearishness still intact, with US real yields heading lower and growth slowing down
• Potential catalysts for dollar weakness include Fed capitulation to dovish side or Russia Ukraine resolution impacting energy prices and trade relations.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• President Trump has broken with tradition by searching for new Fed leadership well ahead of Chairman Powell’s term expiration next May. Two new possible contenders have emerged as potential successors. 
• US growth seems respectable in Q3. Chairman Powell’s assessment of the labour market is being questioned.  A 25 basis point reduction in the Fed’s policy rate is expected in September. 
• US corporate profit growth has been respectable during 2025 H1, but tougher year-ago comparisons suggest more moderate growth in H2.  European profit growth is expected to be good in 2026. 

• The company has been able to lower costs significantly by 12% YoY, improve on its byproduct credits by 37%YoY due to gold prices increasing, while copper prices rose 3.5% YoY.
• Production for H1FY25 rose 10% YoY, led by a ramp-up in Centinala, resulting in EBITDA/profit improving by 60% YoY. 
• While the stock trades at 25x FY25e P/E, we believe that the runway for earnings improvement is enormous as the company ramps up its volumes and manages costs.

• Asia’s base oils demand could get support from pick-up in requirements for replenishment volumes to meet seasonal rise in consumption during final weeks of Q3.
• Simultaneous rise in requirements throughout Asia-Pacific region could magnify pick-up in demand and competition for supplies.
• Blenders’ relatively lower stocks would add to need for additional supplies.