Macroeconomic & Geopolitical

Hawks Are Gaining Speed

September 2022 – 3 min read

Here come the rate hikes. The upward surprise in euro area inflation and Jay Powell’s speech in Jackson Hole confirmed the ECB and Fed are both likely looking at 75bp hikes this month, and markets increased expectations as a result. Meanwhile, China reacts to new lockdown measures.


hawks-are-gaining-chart1.jpgArrows indicate consensus forecast compared to the previous period. Local dates of release.

  • We will watch the ISM Services Index for August following a downward surprise in the S&P Global Services PMI but positive real services spending.
  • With the strength of the U.S. consumer remaining center stage, credit growth will be followed closely to see if there is further room for borrowing to fuel spending and growth.
  • European gas prices remain extremely volatile as EU institutions work on a price cap during Nord Stream 1’s maintenance closure. We will continue to monitor this market, as it has huge implications for inflation.
  • Higher-than-expected inflation increased odds of the ECB hiking rates by 75bps when it meets Thursday, September 8; it would be the biggest hike in two decades.
  • We continue watching industrial production in Germany, which unexpectedly rose in June.
Asia Pacific
  • China credit growth will be watched closely. Despite easing policy, weak sentiment has kept credit growth tepid which, if sustained, could lead to downward surprises in economic growth.
  • China inflation will be released Friday, September 9, and has remained much lower than most other countries, given weaker internal demand.


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