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Needle Still Points South


Yields Bounce as Equities Make New Monthly Highs


Heading North


Bull Rally Accelerates


Economists Survey Raises 2021 CPI Forecast To 4.9%

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Goldman Sachs note that last week saw their "economists pulled forward their forecast for BoE lift-off to May '22 (from Q323), which they expect to be followed by hikes every two quarters thereafter through Q324. They also noted that they expect balance sheet unwind to begin with ending reinvestments in Q4 2022, with sales beginning in 2024, during which time they expect the BoE to pause the hiking cycle; they also revised their peak headline inflation forecast higher."

  • "While recent growth data has been weaker-than-expected and some uncertainty remains about the unwinding of the furlough scheme this month, labor market data have been stronger than expected, potentially implying a smoother furlough unwind, inflation has surprised to the upside, and recent hawkish comments from BoE Governor Bailey and Deputy Governor Broadbent have suggested that the conditions for tightening have been met."
  • "Higher front-end rates as a result of an earlier lift-off should pass-through into EUR/GBP by about 3% over the next 12 months, based on our usual rules of thumb. As a result, we have revised our EUR/GBP forecasts lower from GBP0.85 and GBP0.87 in 6 and 12 months to GBP0.84."