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UK Retail Sales continue to look strong suggesting a positive Q1 GDP number | Notayesmanseconomics's Blog
This morning has brought another reminder that one should always take care with narratives. The mood music for the UK economy post the October Budget has been poor and this week we have seen disappointing numbers for the public finances and a purchasing managers or PMI survey suggesting the economy has started the second quarter…
Bank of England Governor Andrew Bailey prepares the ground for more interest-rate cuts | Notayesmanseconomics's Blog
Yesterday we heard from Bank of England Governor Andrew Bailey as he spoke in Leicester. I have been pointing out for a while now that the Bank of England has been stuck between a rock of the US Federal Reserve where interest-rate cuts are in the distance and the European Central Bank or ECB which…
UK Chancellor Rachel Reeves faces bad news on the public finances and economic growth | Notayesmanseconomics's Blog
This morning has brought news that brings several of our themes into play. For some time now I have been pointing out that the Western democracies have become fiscally spendthrift and addicted to deficits. The additional nuance came post Covid as one might think that there would be some retrenchment after the Helicopter Money splurge…
Should President Trump get his wish and see US interest-rates cut? | Notayesmanseconomics's Blog
Whilst we in the UK were enjoying the Easter break there has basically been one main story in the financial world, and as so often it has been led by President Trump. We are back to the era of government by Trump Tweet except this time around it was on Truth Social. Preemptive Cuts” in…
What can we expect on interest-rates from the Federal Reserve and the ECB? | Notayesmanseconomics's Blog
As we approach Easter we are seeing developments in a theme I noted on the 31st of March. In a nutshell I pointed out that the Bank of England was being pulled one way by the US Federal Reserve and in the opposite direction by the European Central Bank or ECB. Whilst we have seen…
How much confidence can we have in inflation numbers produced by the UK Office for National Statistics? | Notayesmanseconomics's Blog
Today has brought some UK inflation numbers which on the face of them give some hope of an improvement. The Consumer Prices Index (CPI) rose by 2.6% in the 12 months to March 2025, down from 2.8% in the 12 months to February. So we have a fall in the annual rate and by a…
The decline in UK payrolled employment is worrying for economic prospects | Notayesmanseconomics's Blog
Last week brought some welcome economic news for the UK as we were told by the Office for National Statistics that we had seen a strong start to 2025 in terms of economic growth and GDP. However this morning has brought news from the same source that should be deeply troubling for UK Chancellor Rachel…
Will China also blink in the tariff war? | Notayesmanseconomics's Blog
Events in the economic world continue to move very quickly. I note that at some point over the weekend President Trump responded to an issue I raised last Tuesday. Smartphones and several other categories of products will be exempt from sweeping tariffs imposed by the Trump administration earlier this month, a filing showed late Friday. That…
The UK GDP boost is welcome but we need to remember how erratic the monthly numbers have proven to be | Notayesmanseconomics's Blog
After a week and a bit when the news seemed grim with stock markets falling and then behaving like a casino accompanied by bond markets also looking troubled, I have some better news to report today. Monthly real gross domestic product (GDP) is estimated to have grown by 0.5% in February 2025, with growths in…
The economy of Italy remains a Girlfriend in a Coma | Notayesmanseconomics's Blog
In the midst of all the excitement over the past week or so it is important to keep track of other themes in play and this morning I noticed this from a country Bill Emmott described in economic terms as a "Girlfriend in a Coma" In February 2025, the seasonally adjusted index of industrial production…
The fiscal gambling of UK Chancellor Rachel Reeves faces ever higher bond yields | Notayesmanseconomics's Blog
The last week or so has been one of ch-ch-changes and one of them is where the UK has a vulnerability. The Bond Crash of 2025 US interest rate on a 30 year Treasury jumps to almost 5%. (@wmiddelkoop) Then it was almost inevitable. UST 30s topped 5% earlier. (@fullcarry) One way of looking at…
How will the economy of China respond to the Tariff Wars? | Notayesmanseconomics's Blog
The last 24 hours -actually a bit more as markets opened Sunday night UK time - have been quite something. But a relative calm has emerged except for one area which is China. For newer readers my theme for several years now has been that it has been in a type of economic depression due…
How will the central banks respond to the equity market plunge? | Notayesmanseconomics's Blog
Today we face a situation where the words in big friendly letters at the front of The Hitchhikers Guide to the Galaxy are appropriate. DON'T PANIC. Although we do immediately have an issue as we looking at the likely actions of a group of people who are prone to panic ( as we saw around…
The expected path for interest-rates around the world has been changed by the Trump Tariffs | Notayesmanseconomics's Blog
It has been rather an eventful week in terms of financial markets and economics as investors try to come to terms with a different looking situation. But a side-effect has been rather a quantum shift in bond markets and expected interest-rates. We looked at one feature of that yesterday in Japan where the Bank of…
Japan sees its markets gyrate in response to the Trump Tariffs | Notayesmanseconomics's Blog
After what was rather an eventful evening on the tariff front we can take a look East and see the impact on the land of the rising sun Nihon. Of course we start with the background of Japan being a net exporter and thus relatively vulnerable to any trade war. WASHINGTON — U.S. President Donald…
What economic impact will the Trump Tariffs have? | Notayesmanseconomics's Blog
Finally we have arrived at Liberation Day when we will find out in full what US President Donald Trump plans on the tariff front. The Financial Times is presenting it in relatively apocalyptic terms. Investors are on edge ahead of Donald Trump’s plan to hit imports to the US with new tariffs “immediately” on Wednesday,…
ECB President Christine Lagarde wants control over your savings | Notayesmanseconomics's Blog
Today the focus switches to the Euro area and of course it is bracing itself for the imposition of a wave of Trump Tariffs tomorrow. We are in a phase where being a net exporter is not working out as well as it once did. However this morning attempts to get ahead of the tariffs…
The Bank of England should keep interest rates at 4.5% | Notayesmanseconomics's Blog
Today we switch focus to the Bank of England and one perspective is that it is caught between a rock and a hard place. The rock is the US Federal Reserve where in spite of the calls from President Trump for interest-rate cuts prospects have changed. On Friday we got the latest numbers for the…
Retail Sales and GDP revisions provide some better economic news for the UK | Notayesmanseconomics's Blog
One of the things I enjoy about economics is the way that releases can wrong-foot a trend.We have seen my home country the UK under pressure this week as Chancellor Rachel Reeves found herself having to re do her sums for the public finances. Her answers were not especially convincing as I looked at yesterday.…
UK Chancellor Rachel Reeves faces ever more fiscal problems | Notayesmanseconomics's Blog
Yesterday was a significant day for the UK economy and let us examine the words from UK Chancellor Rachel Reeves in her Spring Statement. We can start with what was rather a devastating confession. Mr Speaker… … earlier this month, the OECD downgraded this year’s growth forecast for every G7 economy, including the UK. And…
Some relief for the UK on the inflation front today | Notayesmanseconomics's Blog
Today is rather a set piece event for the UK economy starting with the inflation numbers and then receiving the Spring Statement from Chancellor Rachel Reeves. The relief element in the title comes from this. The Consumer Prices Index (CPI) rose by 2.8% in the 12 months to February 2025, down from 3.0% in the…
The answer to all economic problems is supposedly more Europe | Notayesmanseconomics's Blog
Today the focus moves to Europe and the long list of challenges it faces. Let me start with what has been a long-running feature of the situation highlighted by the Purchasing Managers or PMI release yesterday. The seasonally adjusted HCOB Flash Eurozone Composite PMI Output Index, based on approximately 85% of usual survey responses and…
Grim Times for the UK as Chancellor Rachel Reeves prepares her Spring Statement | Notayesmanseconomics's Blog
Firstly let me thank you all for the kind words on Friday. I had a spell of 48 hours where that is as ill as I have even been. Fortunately my GP responded promptly and something which takes a bit of stick for no longer working -penicillin- has done me a service. Hopefully I will…
The US Federal Reserve has given the Bank of England quite a headache | Notayesmanseconomics's Blog
Today sees the policy announcement from the Bank of England as it reveals how it voted last night. With even the Riksbank voting for unchanged I think we can expect that too. But last night the Federal Reserve gave the Bank of England rather a jolt. The emphasis is mine. The Committee will continue reducing…
The Bank of Japan is caught in a trap of its own making | Notayesmanseconomics's Blog
Earlier this morning we heard from the Bank of Japan and customary Japanese politeness may have led some to think a change was on its way. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations…
The European Union looks determined to add to its debt problems | Notayesmanseconomics's Blog
Today I wish to look at what may well turn out to be rather an epoch making moment for both the European Union and the Euro area. It starts with something rather awkward in terms of economics as we wonder what did they do with all the money here? “European countries collectively saved hundreds of…
China is facing the economic consequences of its house price bust | Notayesmanseconomics's Blog
This morning has brought a reminder of my central theme on the Chinese economy. For newer readers that is that we are seeing a balance sheet brake being applied to the economy via the bursting of the house price bubble. ALL CHINA FEB NEW HOME PRICES -4.9% Y/Y (JAN -5.0%) - REUTERS CALCULATIONS CHINA NBS:…
UK GDP Contracts in January as we see more deindustrialisation in industry | Notayesmanseconomics's Blog
This morning has brought some disappointing news for the UK economy from the Office for National Statistics. Monthly real gross domestic product (GDP) is estimated to have fallen by 0.1% in January 2025, mainly caused by a fall in the production sector, after growth of 0.4% in December 2024. This is rather awkward for a…
UK Chancellor Rachel Reeves is facing the consequences of her own policies | Notayesmanseconomics's Blog
Today the focus is back on the UK economy and much of it is being driven by an area very familiar to me. As someone who has spent years and indeed decades working in bond markets this rather caught my eye yesterday. The United Kingdom Debt Management Office ("DMO") announces that the auction of £4,000…
ECB President Lagarde is preparing the ground for more interest-rate cuts | Notayesmanseconomics's Blog
Today the economic focus is back on Europe in several respects. We can start with the consequences of the Trump Tariffs. We regret the unjustified US 25% tariff on steel and aluminium imports. The EU will protect its consumers and businesses. We are launching swift, proportionate countermeasures worth up to €26 billion, matching the economic…
What is happening to the US economy and stock market? | Notayesmanseconomics's Blog
The last fortnight or so has seen quite a turn in views on both the US economy and stock market. Starting with the economy we noted this on the 26th of February. So let us simply stick to a view that private-sector business surveys have picked up a clear slowing this month. So in the…
The German fiscal stimulus looks set to raise both debt costs and inflation | Notayesmanseconomics's Blog
Last week saw a fundamental shift in the economic and military strategy of Germany and over the weekend we received an update. Good Morning from #Germany, where the CDU/CSU and SPD have agreed on an 11-page exploratory paper to form a govt following the €500bn debt package. While a few reforms have been introduced—such as…
Central bankers ocean metaphors show they are all at sea | Notayesmanseconomics's Blog
This morning has brought bad news for the research student selected to present the morning meeting at the Bank of England. “The typical UK house price remained stable in February, with a slight monthly dip of -0.1%. Annual growth also held steady at +2.9%, with the average house price edging down by just £213 to…
The ECB faces a challenging day as German and other bond yields surge | Notayesmanseconomics's Blog
Today the topic in economics and financial markets is the ECB and the Euro.That is because whilst its expected move is both somewhat mundane and according to a Reuters poll all 82 economists surveyed expected a 0.25% interest-rate reduction. The world has seen some ch-ch-changes this week to say the least and maybe something epoch…
The case of the disappearing and reappearing UK Fiscal “Black Hole” claims of Chancellor Rachel Reeves | Notayesmanseconomics's Blog
Today we find ourselves waking up to news that was I am afraid pretty much inevitable. Chancellor Rachel Reeves will this week submit plans to Britain’s official forecaster for billions of pounds of spending cuts, with a focus on slashing the welfare bill to shore up the country’s weak public finances. ( Financial Times) As…
Western governments just plan to borrow more and more | Notayesmanseconomics's Blog
Today is hardly short of economic news. But under the radar we see one of our main economic themes rather strongly in play again. I keep pointing out that our political class are wedded to loose fiscal policy as we see a succession of stimuli. Global government borrowing is expected to reach a record $12.3tn…
Both the UK money supply growth and the plans for military spending look inflationary | Notayesmanseconomics's Blog
This morning the economic news is arriving in the UK thick and fast. We can start with something relevant to the speech from Bank of England Deputy Governor Dave Ramsden who told us he was now more worried about inflation in spite of voting for three interest-rate cuts the latest of which was last month.…
Bank of England Deputy Governor Dave Ramsden hopes you will follow his words and not his actions | Notayesmanseconomics's Blog
This morning the UK is in the headlines and perhaps the crosshairs but we can start with hope for some good news to come. “I’ll tell you that he earned whatever the hell they pay him over there, but he tried,” Trump said of Starmer, describing him as a “very tough negotiator”. “We could very…
Euro area money supply growth suggests the ECB interest-rate cuts should be over | Notayesmanseconomics's Blog
This morning has brought news which suggests that the claimed pivot from some ECB policymakers would be sensible. Annual growth rate of broad monetary aggregate M3 increased to 3.6% in January 2025 from 3.4% in December (revised from 3.5%). In fact 3.6% is the latest level overall. averaging 3.6% in the three months up to January.…