Perspectives Pictet

Macroview The Fed no longer considers that the risks to the outlook are ‘balanced’. However, yesterday's statement was not particularly dovish. After its meeting earlier this week, the Federal Open Market Committee (FOMC) published a statement where, as widely expected, it acknowledged that “economic growth slowed late last year”. It also added a comment that “the Committee is closely monitoring global economic and financial developments and is assessing their implications for the labor...

[embedded content] Published: Thursday January 28 2016 The new fall in oil prices in recent weeks will add to deflationary pressures in the euro area. Frederik Ducrozet, Senior European Economist at Pictet Wealth Management, discusses the size of the impact and the likely policy response from the ECB.

The new fall in oil prices in recent weeks will add to deflationary pressures in the euro area. Frederik Ducrozet, Senior European Economist at Pictet Wealth Management, discusses the size of the impact and the likely policy response from the ECB.

Published: Wednesday January 27 2016 A Singapore group has become a leading supplier of comprehensive health services to businesses and health insurers in the Asia-Pacific region, helping keep patients out of hospital though preventative healthcare. Providing healthcare for all their citizens is a key issue for Asian governments. The populations of countries such as India, China and Indonesia are rapidly ageing, placing a growing burden on healthcare budgets which are already insufficient to...

The absence of deterioration in economic fundamentals suggests that conditions now look ripe for a rebound in equity markets. Equity markets have had their worst start to the year since 1897, following on from bouts of elevated volatility in 2015, and currency markets have also seen major disruption. But elevated market volatility this year was not unexpected and economic fundamentals are little changed. Conditions now look ripe for a rebound. What’s worrying markets? Recent market...

The decline in equity markets since the start of the year stands out as one of the largest in history in January, not only in its magnitude but also its suddenness. One has to go back to 1897 to find such a bad start for equity markets. This note will analyse the situation on the markets and the prospects for a rebound. As often in a large correction, one can find many causes. We think the following are the most significant: Monetary policy running out of steam. The fall in commodities...

Despite a drop in January, the composite PMI remains resilient in terms of real activity. We continue to expect the pace of euro area growth to speed up from 1.5% in 2015 to 1.8% in 2016. Euro area business surveys (PMIs and IFO) disappointed in January, partly as a reflection of global uncertainty related to EM growth and market volatility so far this year. PMIs survey: easing, but still at a high level According to Markit’s preliminary estimates, the euro area composite PMI eased from...

Much of the ECB’s decision at the upcoming 10 March meeting will depend on the assessment of the effects of lower oil prices on inflation. We find little evidence at this stage of large second-round effects on consumer prices. Draghi’s latest hint at fresh monetary easing heralds a six-week period of waiting and guessing what the next measures might look like. One critical factor driving the decision will be the ECB’s assessment of indirect effects of lower oil prices on inflation....

ECB policy rates will remain “at present or lower levels for an extended period of time”. Another deposit rate cut, to -0.40% or even lower, looks likely to be part of the ECB’s toolkit, especially if the Fed turns more cautious in the meantime. The ECB left all policy settings unchanged at today’s meeting, as widely expected. At the same time, the overall tone of the press conference reflected yet another significant dovish shift in the ECB’s communication – one that the Governing...

The risks implied by the Fed’s tightening cycle and the new Chinese monetary regime, among other things, will favour funding currencies over carry currencies in the next twelve months. Instead of looking at single currencies, it is sometimes interesting to look at broader themes to have a better understanding of how a certain group of currencies might behave. Among the best-known themes or strategies are carry trades, which are based on the principle of systematically buying...