November 14, 2026

October nonfarm payrolls and CPI were strong, the AI spending boom continues and the Atlanta Fed estimates fourth-quarter GDP growth at 3.5%, significantly above the 2% potential growth rate. At the same time, regional Fed surveys of prices paid, shifted six months forward, point to a continued strong uptrend in inflation, with PCE inflation moving towards 6%, see chart below. The bottom line is that strong demand, combined with ongoing supply shocks to imports, labor and energy, raises the risk that the Fed is falling behind the curve and will have to raise rates much more than markets currently expect. For more discussion, see also our recent Spark here.

November 13, 2026

European defense spending grew 16% last year and is expected to grow at double-digit rates for the next three years, see chart below. NATO members have committed to spend 3.5% of GDP on core defense and another 1.5% on broader security, although fiscal constraints will influence how quickly countries get there. Recent disruptions, from attacks on subsea cables to drones near airports, to supermarket fridges and outages affecting critical infrastructure, may bring forward the need for that broader 1.5% security spending. But where this spending goes is also broadening beyond traditional weapons and defense technology. Spending increasingly includes cybersecurity, critical infrastructure, maritime and pipeline sensors, resilient energy systems, as well as the local industrial capacity needed to manufacture and secure resilient supply chains. Many of these businesses serve both commercial and national-security markets. The bottom line is that some of the next beneficiaries of Europe's defense buildout may sit in infrastructure, energy and industrial technology rather than in the defense sector itself. Written by Huw van Steenis

November 12, 2026

Software companies are struggling to refinance in a higher-for-longer rate environment, with the 2028 maturity wall shrinking by just 10% versus 22% for the rest of the market, see chart below.