Rock The Vote

July 04, 2024

Rock The Vote

  • The UK holds general elections today. Polling stations close at 10:00pm (London time) with exit polls results announced shortly after.
  • Rising expectations of Fed policy easing is boosting global financial market risk sentiment.
  • Swiss disinflationary pressures quicken in June. SNB on track to cut rates again in September.

USD is consolidating near yesterday’s lows amid thin 4th of July holiday trading. The surprised contraction in US services activity in June dragged USD lower against all major currencies and triggered a rally in Treasuries and stocks as Fed funds futures raised odds of a September rate cut 10pts to 80%. Rising expectations of Fed policy easing has also boosted global financial market risk sentiment with stock markets in Asia and Europe powering forward.

The US ISM services index unexpectedly plunged in June below the 50 boom/bust level to 48.8 (consensus: 52.7, prior: 53.8), the lowest since July 2009. The details showed demand and employment contracted while price increases cooled. As a result, the Atlanta Fed's GDPNow model is now tracking annualized Q2 growth of 1.5%, down from 1.7% on July 1.

Meanwhile, the FOMC June meeting Minutes suggested the bar for a Fed funds rate cut in September is low. The Minutes highlighted that “the vast majority of participants assessed that growth in economic activity appeared to be gradually cooling”. Additionally, “participants suggested that a number of developments in the product and labor markets supported their judgment that price pressures were diminishing.”

Tomorrow’s US June non-farm payrolls data will be a key driver of US interest rate expectations. Overall, we remain cyclically bullish on USD, but in the near-term softer US economic activity is a USD headwind.

The UK holds general elections today. Polling stations close at 10:00pm (London time) with exit polls results announced shortly after. Labour is expected to win an outright majority ranging from 100 to 200 seats. In our view, a Labour government would be positive for GBP. The Labour Party under Keir Starmer has moved away from left-leaning economic policies since taking over from Jeremy Corbyn. See here for our election primer.

The Bank of England (BOE) releases its decision maker panel (DMP) survey on inflation expectations (9:30am London). Inflation expectations remain contained, with 1-year ahead expected to fall a tick to 2.8%. Easing inflation expectations will raise odds of an August policy rate cut, which is currently 62% priced-in money markets.

EUR/USD failed to sustain a break above key resistance at 1.0800 weighed down by ECB/Feb policy divergence. The ECB’s account of its June 6 decision will offer more details behind the ECB’s hawkish cut (12:30pm London). At that meeting, the ECB delivered the widely expected 25 bp policy rate cut but tempered expectations that an aggressive easing cycle is underway. The decision to start easing policy was not unanimous as ECB Governing Council member Robert Holzmann objected to the cut.

CHF underperformed after Swiss inflation cools more than expected. Headline CPI was unchanged in June (consensus: +0.1% m/m) and printed at 1.3% y/y vs. 1.4% y/y in May. Annual headline inflation rate was a tick lower than consensus and the Swiss National Bank’s (SNB) Q2 projection and the lowest since October 2021. Core CPI fell 0.1% m/m and unexpectedly eased to a 29-month low at 1.1% y/y (consensus: 1.3% y/y) from 1.2% y/y in May. Bottom line: the SNB has scope to slash the policy rate further as inflation remains well within the bank’s stability range of 0 and 2%. The swaps market raised odds of a September rate cut to over 80% from roughly 60% ahead of the CPI data.

Brown Brothers Harriman & Co. (“BBH”) may be used to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries.This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners.© Brown Brothers Harriman & Co. 2024. All rights reserved.

As of June 15, 2022 Internet Explorer 11 is not supported by

Important Information for Non-U.S. Residents

You are required to read the following important information, which, in conjunction with the Terms and Conditions, governs your use of this website. Your use of this website and its contents constitute your acceptance of this information and those Terms and Conditions. If you do not agree with this information and the Terms and Conditions, you should immediately cease use of this website. The contents of this website have not been prepared for the benefit of investors outside of the United States. This website is not intended as a solicitation of the purchase or sale of any security or other financial instrument or any investment management services for any investor who resides in a jurisdiction other than the United States1. As a general matter, Brown Brothers Harriman & Co. and its subsidiaries (“BBH”) is not licensed or registered to solicit prospective investors and offer investment advisory services in jurisdictions outside of the United States. The information on this website is not intended to be distributed to, directed at or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Persons in respect of whom such prohibitions apply must not access the website.  Under certain circumstances, BBH may provide services to investors located outside of the United States in accordance with applicable law. The conditions under which such services may be provided will be analyzed on a case-by-case basis by BBH. BBH will only accept investors from such jurisdictions or countries where it has made a determination that such an arrangement or relationship is permissible under the laws of that jurisdiction or country. The existence of this website is not intended to be a substitute for the type of analysis described above and is not intended as a solicitation of or recommendation to any prospective investor, including those located outside of the United States. Certain BBH products or services may not be available in certain jurisdictions. By choosing to access this website from any location other than the United States, you accept full responsibility for compliance with all local laws. The website contains content that has been obtained from sources that BBH believes to be reliable as of the date presented; however, BBH cannot guarantee the accuracy of such content, assure its completeness, or warrant that such information will not be changed. The content contained herein is current as of the date of issuance and is subject to change without notice. The website’s content does not constitute investment advice and should not be used as the basis for any investment decision. There is no guarantee that any investment objectives, expectations, targets described in this website or the  performance or profitability of any investment will be achieved. You understand that investing in securities and other financial instruments involves risks that may affect the value of the securities and may result in losses, including the potential loss of the principal invested, and you assume and are able to bear all such risks.  In no event shall BBH or any other affiliated party be liable for any direct, incidental, special, consequential, indirect, lost profits, loss of business or data, or punitive damages arising out of your use of this website. By clicking accept, you confirm that you accept  to the above Important Information along with Terms and Conditions.

1BBH sponsors UCITS Funds registered in Luxembourg, in certain jurisdictions. For information on those funds, please see

captcha image

Type in the word seen on the picture

I am a current investor in another jurisdiction