22nd July 2025
UK Government spending overshoots in June
The UK Government announced today that its spending in June overshot expectations by 6.6Bn. Increased cost of services and interest payments are being blamed as the central reasons for the overspend. This overshoot further erodes the chancellors thin budget headroom and should the overspend continue into the remainder of the year, will turn into an increasingly large deficit, challenging the Labours pledge to not borrow to fund day to day spending. The overall picture of UK finances continues to suggest that the Chancellor will have to raise UK taxes to plug the fiscal hole at the next budget.
15th July 2025
US inflation ticks up as tariffs bite
US inflation rose to 2.7% in June, above expectations, driven partly by Trump's renewed tariffs. The increase from May's 2.4% reading highlights early signs of imported cost pressures as companies begin passing on costs to consumers. Core inflation, which excludes food and energy, climbed 2.9%, though second-hand car prices helped limit the rise. While Trump pressed the Fed for aggressive rate cuts, the inflation print tempered expectations for immediate action. Futures markets slightly trimmed rate-cut bets, now anticipating two modest reductions by year-end. Treasury yields and the dollar inched higher, signalling that investors see inflation risk building. However, US equities reacted calmly, briefly hitting record highs before easing. The data reinforces the Fed's cautious stance as it balances inflation with uncertain global trade conditions.
11th July 2025
UK economy shrinks in Q1
The UK economy shrank by 0.1% in May, following a sharper 0.3% fall in April, as declines in manufacturing and construction signalled a sharp loss of momentum after a strong first quarter. This second consecutive monthly contraction raises concerns over the health of the economy and complicates Chancellor Rachel Reeves' plans to revive growth and close a significant fiscal gap. Analysts suggest earlier Q1 strength was boosted by one-off factors, with little sign of a sustained recovery. The Bank of England may now be more inclined to cut interest rates in August from the current 4.25%, especially as inflation expectations have moderated. Markets reacted with a slight drop in sterling and increased bets on rate cuts, while GDP figures prompted fresh scrutiny over the government's autumn budget plans and tax policies. The FTSE 100 was largely flat but sensitive sectors such as housebuilders and consumer discretionary stocks saw modest gains on rate cut hopes.
3rd July 2025
US jobs market remains strong
The US economy added 147,000 jobs in June, surpassing expectations of 110,000 and easing fears of a slowdown. The unemployment rate dipped to 4.1%, and prior months' figures were revised upwards, reflecting underlying labour market strength. However, the headline number was flattered by a jump in state government employment, while labour force participation fell, suggesting fewer people actively seeking work. Markets quickly scaled back expectations of an imminent interest rate cut by the Federal Reserve, with bets on a July cut now near zero. The dollar rose 0.5% against peers, and two-year Treasury yields climbed to 3.87%, reflecting diminished chances of rate relief. US stock futures gained modestly.
1st July 2025
UK house prices fall in June
UK house prices fell 0.8% in June, their steepest drop since January 2023, defying expectations of a modest rise. Annual growth also slowed to 2.1%, the weakest since July 2024. Nationwide's chief economist cited April's reversal of stamp duty cuts as a key drag, while others pointed to a flood of properties re-entering the market. Despite this, the backdrop remains supportive: low unemployment, rising real wages, and declining mortgage rates. Markets now price in a 75% chance of a Bank of England rate cut in August, which would ease borrowing costs further and potentially stabilise housing activity. With rate-sensitive sectors in focus, the FTSE 250, home to more domestically exposed stocks, saw mild gains on hopes of monetary easing, though broader market moves remained muted.
1st July 2025
Eurozone inflation ticks back up to target
Eurozone inflation rose to 2% in June, returning to the European Central Bank's (ECB) medium-term target from 1.9% in May. While core inflation, which strips out volatile food and energy, remained steady at 2.3%, services inflation edged up to 3.3%, pointing to persistent domestic price pressures. ECB President Christine Lagarde signalled the end of the current policy cycle, having already halved rates to 2% since last summer. The euro held firm, buoyed by its 14% gain this year against the dollar, which has helped reduce import costs and overall inflationary pressure. Despite temporary oil price spikes linked to Middle East tensions, markets expect no immediate shift in ECB policy, with only a 10% chance of a July rate cut priced in. Bond and currency markets were largely stable following the data.
26th June 2025
US-brokered ceasefire holds so far
A US-brokered ceasefire between Israel and Iran was announced on 24 June, aiming to end 12 days of hostilities sparked by Israeli strikes on Iranian nuclear sites. Both sides agreed to the truce, but violations occurred within hours. President Trump publicly rebuked both nations, urging restraint and highlighting the ceasefire's role in stabilising oil markets. The ceasefire led to a 6.1% drop in oil prices to $67.13 per barrel, easing inflation concerns. US equity markets rallied on the news, with the S&P 500 and Nasdaq both gaining over 1% as investors welcomed reduced geopolitical risk and lower energy prices. Since, the ceasefire has held with markets broadly welcoming the relative calm, with it largely being viewed as a big political achievement for President Trump. Unless there are any immediate re-escalations it is likely to be put to the back of investors' minds for now.
23rd June 2025
US enters Israel's war against Iran
Over the weekend, the US launched airstrikes on three Iranian nuclear sites, in a surprise move dubbed Operation Midnight Hammer, escalating the Iran–Israel conflict. The action spurred fears of supply disruption through the Strait of Hormuz, driving Brent crude above $78 a barrel which is a five-month high. Equity markets dipped modestly, while defence and energy stocks climbed. Investors sought safety in bonds, gold, and the US dollar. The International Monetary Fund warned that any Iranian retaliation, particularly involving the Strait, could push oil to above $100 intensifying inflation and hampering growth. Rate cuts may be delayed, with markets bracing for prolonged volatility.
20th June 2025
Retail sales paint ominous picture for UK economy
British retail sales plunged by a record 2.7% in May, the sharpest monthly decline since December 2023, largely due to a 5% drop at food stores and a 2.5% slump in household goods, contrasting with economists' 0.5% forecast. May's decline reversed a 1.3% rise in April, supported then by unseasonably sunny weather. Year on year volumes are down 1.3%, signaling weaker consumer demand. Though retail appears volatile month to month, the sharp drop points to a cooling economy. This follows subdued Q1 GDP growth of 0.7% and adds to signs of strain in the labour market that have shaped the Bank of England's cautious stance. Markets reacted swiftly: sterling slipped, UK two year gilt yields softened, and equity markets regained some ground amid renewed speculation of upcoming rate cuts.
19th June 2025
Bank of England keeps rates steady
The Bank of England kept rates steady at 4.25% today, as six of nine policymakers voted for no change, citing global risks including Middle East instability and volatile US trade policies. Though inflation eased to 3.4% in May, it remains above target, while wage growth and services inflation are still strong. However, signs of a cooling labour market and slowing growth led three members to back an immediate cut. Governor Andrew Bailey suggested a rate cut could come in August if data supports it. Markets now expect two cuts this year. Gilt yields dipped and the FTSE 100 edged higher on rate-cut hopes.
19th June 2025
The Fed resists Tump's calls for cuts
The US Federal Reserve kept interest rates unchanged at 4.25–4.5% on 18 June, stressing inflation remains sticky and economic risks, especially from Trump's new tariffs, cloud the outlook. While some policymakers hinted at cuts later in 2025, the Fed maintained a cautious tone, reinforcing its data-driven stance. Former President Trump lashed out at Chair Jay Powell for not cutting rates, claiming his decisions are 'costing America billions'. Trump's criticism, echoing calls for stimulus, clashes with the Fed's inflation concerns. Markets reacted with caution: the S&P 500 slipped, the Dow edged lower, and bond yields nudged up as traders pushed back expectations for cuts.
18th June 2025
UK Inflation falls to 3.4% in May
Uk Inflation fell to 3.4% in May which was largely in line with expectations and represents a fall from April’s 3.5% number. The move was small but certainly remained in positive trajectory back to the official target of 2% and should reassure consumers of continuing price stability on the high street. However, the data coming in line with expectations does little to prompt the Bank of England into making an emergency 0.25% cut to the UK interest rate given a cut of 0.25% was made last month. The UK’s Central bank remains alert to a deteriorating employment and economic growth picture which would prompt more cuts to the UK’s base rate.
13th June 2025
Escalations in Middle East rattle markets
Overnight Israel launched a significant military operation against Iran, targeting nuclear facilities and high-ranking military officials, including the head of the Revolutionary Guards. This preemptive action aimed to impede Iran's nuclear capabilities amid stalled diplomatic negotiations. In retaliation, Iran deployed over 100 drones towards Israel, escalating tensions and prompting fears of a broader regional conflict. The international community distanced itself from the strikes, emphasising the need for restraint. Financial markets reacted swiftly: Brent crude oil prices surged by 5% to $72.88 per barrel, reflecting concerns over potential disruptions in the Strait of Hormuz, a critical chokepoint for global oil shipments. Gold prices climbed to $3,415 per ounce as investors sought safe-haven assets. Major stock indices experienced declines, with the US Dow Jones Futures dropping 600 points, indicating heightened investor anxiety over the unfolding situation.
12th June 2025
UK economy contracts as tariffs hit
The UK economy contracted by 0.3% in April 2025, marking its sharpest monthly decline since October 2023 and exceeding economists' expectations of a 0.1% drop. This downturn was primarily driven by a significant fall in goods exports to the US, likely in anticipation of new tariffs introduced by President Trump's administration. Additionally, the expiration of a property tax break adversely affected service sectors such as real estate and legal services. Households also faced increased national insurance contributions and rising utility bills, further dampening economic activity. The services sector, which constitutes a substantial portion of the UK economy, shrank by 0.4%, highlighting broader economic vulnerabilities. In response to these challenges, the Bank of England, having already reduced interest rates four times since last summer, is anticipated to implement further cuts amid rising unemployment and slowing growth. Market reactions included a modest dip in the pound and a decline in gilt yields, reflecting changing interest rate expectations.
10th June 2025
UK unemployment highest in four years
A range of statistics released in April painted a picture of continued weakness in the UK labour market. The jobless rate has increased to 4.6% for the three months to April-end after the number of workers on UK company payrolls fell at the fastest rate since the height of Covid. Annual wage growth slowed to 5.2%, below forecasts. The data comes on the back of Chancellor Rachel Reeve's £25bn rise in the national insurance contributions required by employers, increasing the cost associated with hiring. Feedback from ONS surveys suggests that some firms may be holding back from recruiting new workers or replacing people when they move on. The data provides a key insight into the Bank of England's rate cut decisions, with a weakening jobs market suggesting further cuts may be ahead.
6th June 2025
Mixed jobs report has Trump calling for rate cuts
The U.S. labour market showed resilience in May, adding 139,000 jobs, above expectations of 126,000 despite headwinds from President Trump's new tariff policy. The unemployment rate remained steady at 4.2%, but prior months saw significant downward revisions, with March and April figures reduced by a combined 95,000 jobs, indicating a softening trend. Wages rose 0.4% month-over-month and 3.9% year-over-year, outpacing forecasts, while labour force participation fell to 62.4%. Markets reacted positively, with major indices rising around 1%. Despite mixed signals, economists expect the Fed to hold rates steady until December, awaiting further clarity on inflation impacts from tariffs.
21st May 2025
UK inflation ticks up in April
UK inflation surprised to the upside in April, with headline CPI (consumer price index) rising to 3.5% year-on-year. Well above March's 2.6% and surpassing consensus expectations of 3.3%. The surprise stemmed largely from a combination of regulated price increases across energy, water, and a rise in employer National Insurance contributions, as well as a hike in the minimum wage. Core inflation, which strips out the usually volatile food and energy numbers, also rose from 3.4% to 3.8%, while services inflation surged to 5.4%, driven primarily by a 6% increase in the household energy price cap. Despite this sharp acceleration, the Bank of England had anticipated a near-similar outcome, projecting a rate of 3.4%. In fact, the BoE and market consensus still foresee moderating inflation in the months ahead, aided by easing energy costs, a stronger pound, softer import prices, and slack in the labour market.
8th May 2025
UK cuts interest rates by another quarter point to 4.25%
The UK’s Bank of England cut its interest rate by another 0.25% taking the overall figure to 4.25% with the governor hinting that more cuts could follow in the coming months should the UK continue to see inflation easing. Having said that, the bank did qualify these remarks by stating they anticipated UK inflation rising to 3.5% in the short term as energy prices fluctuated. The cut on the 8th was the fourth in the last 12 months and reports indicated the bank nearly voted for a larger cut down to 4% to help offset the impact of US tariffs on UK exports. This cut in rates will feed into greater positivity for consumers and for the UK’s housing market as mortgages become more affordable.
4th April 2025
Jobs Climb, Tariffs Loom: Powell's Balancing Act Continues
The U.S. economy added 228,000 jobs in March 2025, far surpassing expectations and highlighting the ongoing resilience of the labour market. This strength makes it less likely that the Federal Reserve will rush to cut interest rates, given its data-dependent approach to policy. That said, markets are experiencing heightened turbulence due to the uncertainty triggered by Donald Trump's newly introduced tariffs. This is not the first period of economic disruption that Fed Chair Jerome Powell has navigated. Under his leadership, the Federal Reserve has maintained a flexible and adaptive stance, continuously reassessing its policy direction as new economic data emerges. While the job market remains solid, it's still too early to assess the full impact of the tariffs. Key unknowns include how deeply they will ripple through global trade and which countries might retaliate with tariffs of their own. The Fed will be watching these developments closely in the coming months as it weighs the balance between inflation control and economic stability.
26th March 2025
UK Inflation falls more than expected in February
UK CPI dropped to 2.8% in February, the lowest since 2021, raising expectations for rate cuts later this year. This shift could benefit interest-rate sensitive sectors like real estate, utilities, and consumer discretionary, which tend to perform well as borrowing costs fall. At the same time, inflation-resilient sectors such as energy, commodities, and healthcare remain important as core price pressures and energy volatility persist. The pound fell on the news with the FTSE 100 rallying.
24th March 2025
Latest Federal Reserve meeting sees US rates on hold
The US Federal Reserve decided to keep interest rates on hold on Wednesday 19th. This was a reaction to inflation remaining flat with that number remaining slightly elevated in certain areas which, all in all, did not prompt the FED to need to reduce the US rate of interest. The FED chairman, Jay Powell was keen to stress the US was in no rush to lower rates but he did parse this comment by saying the economic outlook for the US remained uncertain off the back of the current administrations trade policies.
12th March 2025
US inflation cools and beats to the downside as markets eye Fed’s next move
US inflation cooled in February, offering some relief ahead of tariffs expected to push prices higher. Consumer prices rose 0.2% month-on-month, down from 0.5% in January and below economists’ forecasts. Annual CPI came in at 2.8%, just below the 2.9% estimate, while core CPI YoY was 3.1%, under the 3.2% forecast. Airfares, new car prices, and gasoline declined, while shelter costs, the largest component of services inflation, rose at a slower pace. Equities opened higher, with the S&P 500 and Nasdaq gaining as investors welcomed signs of easing price pressures. The Federal Reserve is expected to keep rates steady next week, though signs of economic weakness could see policy easing arrive sooner than previously anticipated.
7th March 2025
US job creation at 151k in February, slightly weaker than estimates
The US economy added 151,000 jobs in February which was slightly below what the market was expecting of 160,000. Alongside this, unemployment for the US crept up to 4.1% against expectations it would remain flat at 4%. Whilst this jobs number was a miss against expectations, it was only a small miss and with January’s jobs number revised down to 125,000 the February figure remains higher than that of January showing an increase in Jobs being made. Stocks reacted slightly negatively in what continues to be one of the worst weeks for global markets going back to September of 2024.
3rd March 2025
Euro-Zone Inflation Eases as ECB Moves Closer to Rate Cuts
Euro-Zone inflation slowed, reinforcing expectations that the ECB is nearing its 2% target as rate cuts continue. Consumer prices rose 2.4% in February, down from 2.5% in January, slightly above economists' forecasts. Services inflation, a key focus for policymakers, eased to 3.7%, marking its first drop below 4% since April 2024. The euro gained 0.6% to $1.0439, while German bond yields climbed. Analysts expect a 25 bps rate cut in March, with further reductions likely. However, the ECB remains divided as officials weigh economic risks against controlling inflation.
24th February 2025
German Election Shake-Up Signals Policy Shift
In the February 2025 German federal election, the CDU/CSU alliance, led by Friedrich Merz, secured victory with 28.5% of the vote, ahead of the far-right AfD at 20.8% and the SPD at 16.4%, marking the Social Democrats' worst performance. The Greens and The Left followed with 11.6% and 8.8%, respectively. With coalition talks underway, Merz is likely to seek a 'grand coalition' with the SPD to establish a stable government. His policy agenda focuses on revitalizing the economy through corporate tax cuts and deregulation, stricter immigration controls, stronger defense commitments, and car-friendly energy policies. These priorities address Germany's sluggish growth, industrial stagnation, and security concerns, setting the stage for a significant shift in governance
19th February 2025
UK Inflation Rebound Intensifies Pressure on Bank of England's Rate Cut Plans
In January, the UK annual inflation rate rose to 3.0%, surpassing market expectations of 2.8% and up from 2.5% in December. The increase was driven by higher private school fees, following the introduction of a new sales tax, along with rising transport and food costs. Higher inflation makes a March interest rate cut by the Bank of England improbable, with figures confirming a rebound as rising air fares and the introduction of VAT on private school fees widened the gap with the Bank’s 2% target. Core inflation, excluding volatile items, climbed to 3.7% from 3.2%, adding complexity to the Bank’s monetary policy outlook and potentially delaying rate cuts.
12th February 2025
US inflation surprises to the upside in January
Inflation in the US unexpectedly rose in January to 3%. This underscores the challenges facing the world’s largest economy in controlling their rate of inflation whilst trying to lower interest rates to stimulate the economy. Interestingly, a lot of this rise can be attributed to the price of eggs alone which rose 15% off the back of the recent avian flu outbreak. Regardless of the driver, the rate was higher and as such stocks and bonds suffered in the wake of the announcement as investors reduced the probability of the US cutting rates again in 2025.
7th February 2025
U.S. jobs growth comes in weak
The U.S. Bureau of Labor Statistics reported that the economy added 143,000 jobs in January, below the anticipated 170,000. This marks a slowdown from December's revised gain of 307,000 jobs. Despite the deceleration, the unemployment rate decreased to 4.0%, the lowest since May. Revisions to previous months' data added 100,000 jobs to prior estimates, which softened the blow of the weak January number. Major U.S. stock indices declined, with the S&P 500 decreasing by 0.9%, and the Nasdaq Composite dropping by 1.4%. These declines were attributed to the lower-than-expected job additions and a decrease in consumer sentiment.
6th February 2025
Bank of England cuts interest rates by another 0.25%
The UK's Bank of England has cut its interest rate by another 0.25% to 4.5%. The BoE cites mounting concern around the UK's growth trajectory with this now being cut to 0.75% down from 1.5% which was only made in November 2024. Interestingly the BoE also said it predicted short term inflation to rise once again before it fell, stoking concerns around stagflation taking hold in the UK. As rates fell the pound weakened which inversely boosted the value of he FTSE 100 with its international focused businesses to a record high. All eyes will now be on the UK's first quarter growth for the next update on the state of UK growth and for a hint as to where interest rates will go next.
15th January 2025
US Inflation Eases in December; Markets React Positively
In December, the U.S. annual inflation rate came in at 2.9%, slightly above the market estimate of 2.8%, rising from 2.7% in November. The increase was driven primarily by higher energy costs, with gasoline prices climbing 4.4%. Core inflation, which excludes food and energy, edged down to 3.2%, slightly below expectations of 3.3%, and down from 3.3% the previous month. Bond markets rallied on lower-than-expected core inflation figures with 10-year treasury yields falling to 4.7% from 4.8%, whilst U.S. equity markets opened higher following a weak start to the trading week. The recent market moves reflect growing investor optimism, without dashing hopes that the Federal Reserve will be able to cut interest rates in 2025.
15th January 2025
UK Inflation Eases, However Core Pressures Persist
UK inflation eased to 2.5% in December, down slightly from 2.6% in November, as energy and transport costs continued to decline. However, core inflation held firm at 2.7%, reflecting persistent pressures in services and wage growth. The Bank of England is expected to adopt a cautious stance, with policymakers balancing moderating headline inflation against underlying risks that remain above the 2% target. Despite cooling from last year’s peaks, structural price drivers and business cost pressures pose challenges to sustained disinflation. The pound edged 0.1% lower to $1.26 following the release, as markets weighed the potential for a slower shift in monetary policy.
10th January 2025
US posts another blockbuster jobs number for December
The US economy posted another blowout jobs number in December with 256,000 jobs created. This was well above the markets estimates of 165,000 and evidences just how strong the US continues to be. The market sold off on the news primarily because a strong economy with a strong labour market does not need interest rate cuts to which the market is very keen to see keep coming down.