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Monetary

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The “Gratuitous” 1994 Fed Tightening Cycle Is A Bad Analogue For Today

Many investors have cited the 1994 tightening cycle as an example of how the Fed managed to raise rates without triggering a recession. However, the unemployment rate was 6.5% in early 1994, which meant that inflation was less of a risk than it is today. Productivity growth also accelerated starting in the mid-1990s. While something similar may happen again thanks to AI, so far this is not visible in the aggregate productivity data.

Global Investment Strategy by Peter Berezin
US January JOLTS Report: Persistent Resilience
The US January JOLTS data released yesterday was in line with expectations, with job openings clocking in at 8.86 million versus a downwardly-revised 8.89 million in December. Importantly, US job openings are likely to continue trending lower in February…
Daily Insights
The Bank Of Canada Remains On A Dovish Path
The Bank of Canada (BoC) kept its policy rate steady at 5% for the sixth consecutive meeting yesterday, in line with expectations. The BoC, which has changed its communication policy to now provide a press conference after every meeting, reasserted the need…
Daily Insights
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Expected Inflation Surges, Just As Expected

Expected inflation has surged to its highest level in a year. This has surprised many people, but expected inflation is behaving just as expected. Expected inflation is not a prophecy, it is just a mathematical function of delivered inflation. We discuss what this means for central banks in the US, UK, euro area, and Japan. Plus: bitcoin’s structural uptrend to $100,000+ is still intact.

Counterpoint by Dhaval Joshi
The Fed Doesn't Need To Raise Rates To Cause A Large Hawkish Shock
We noted in a previous Insight that recent comments from Raphael Bostic, President of the Federal Reserve Bank of Atlanta, may reflect a growing realization among policymakers that they have inadvertently caused a significant easing in financial…
Daily Insights
China PMIs: Stabilizing
China’s NBS PMI release indicates that the Chinese growth is stabilizing at a low level. The composite PMI came in at 50.9 – unchanged from January. The stabilization was led by the non-manufacturing sector though both the manufacturing and non-manufacturing…
Daily Insights
Switzerland: Deflation Is Now The Risk
Swiss annual inflation continued to decelerate in February, with headline CPI now at 1.2% and core at 1.1%. This is remarkable since inflation continues to track well below the 1.8% forecast by the Swiss National Bank (SNB) for the first quarter. Import and…
Daily Insights
Easier Financial Conditions Have Made Their Way To "Main Street"
Economic sentiment has improved since the December FOMC meeting, with positive momentum extending into February. The chart above neatly summarizes the impact that the Fed’s projected easing has had on sentiment, both on “Wall Street” and “Main Street”. The…
Daily Insights
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Risks To Our View

We feel as good about spurning the soft-landing narrative today as we did about spurning the recession narrative a year ago, but we are not giving into complacency. This week’s report looks at two key ways that we may be getting it wrong: by underestimating households’ asset support and the labor market’s durability. We remain tactically neutral but continue to look for opportunities to turn defensive.

US Investment Strategy by Doug Peta
The ECB Needs Further Evidence That Inflation Is Heading To 2%
The preliminary Eurozone inflation release suggests that price pressures eased by less than anticipated in February. Headline CPI inflation slowed from 2.8% y/y to 2.6% y/y (slightly above expectations of 2.5% y/y. Similarly, although the core inflation gauge…
Daily Insights

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