Tag Archives: Macroview

The likelihood of active FX intervention by the US authorities remains low but is increasing and the Trump administration can be expected to continue to pressure the Fed to cut rates. The Trump administration has been focusing on the US’s trade deficit with some of its main trading partners such as China and Germany. A strong dollar is exacerbating this deficit and has visibly exasperated President Trump. Indeed, the...

Industrial production rebounded in May. But a closer look shows that the improvement was narrowly spread, and euro area manufacturing faces numerous challenges ahead.After two consecutive months of contraction, euro area industrial production (IP, excluding construction) rose by 0.9% month on month (m-o-m) in May, above consensus expectations. Production of consumer goods surged in May. Output of capital goods and energy also increased. However, output of intermediate goods slipped.While the...

The likelihood of active FX intervention by the US authorities remains low but is increasing and the Trump administration can be expected to continue to pressure the Fed to cut rates.The Trump administration has been focusing on the US’s trade deficit with some of its main trading partners such as China and Germany. A strong dollar is exacerbating this deficit and has visibly exasperated President Donald Trump. Indeed, the Fed’s broad dollar index was recently back close to its December 2016...

Downward pressure on growth persists amid ongoing trade tensions. Chinese real GDP growth came in at 6.2% year-over-year (y-o-y) in Q2, down from 6.4% in Q1, and the lowest quarterly growth in over two decades. The tertiary sector (mainly services) continued to lead growth, expanding by 7.0% y-o-y in Q2, the same as in Q1. In comparison, growth in the secondary sector (mainly manufacturing) declined to 5.6% y-o-y, from...

Downward pressure on growth persists amid ongoing trade tensions.Chinese real GDP growth came in at 6.2% year-over-year (y-o-y) in Q2, down from 6.4% in Q1, and the lowest quarterly growth in over two decades.The tertiary sector (mainly services) continued to lead growth, expanding by 7.0% y-o-y in Q2, the same as in Q1. In comparison, growth in the secondary sector (mainly manufacturing) declined to 5.6% y-o-y, from 6.1% in the previous quarter.From an expenditure perspective, consumption...

Fed dovishness is helping to curb financing costs for corporates but does not seem to be percolating down to the US consumer, whose debt-servicing costs are rising. This could be something to watch. The Federal Reserve (Fed)’s leading priority now is to help sustain the US business cycle, hence the concept of ‘insurance’ rate cuts put forward by Fed chairman Jerome Powell, with some echoes of Alan Greenspan’s philosophy...

Fed dovishness is helping to curb financing costs for corporates but does not seem to be percolating down to the US consumer, whose debt-servicing costs are rising. This could be something to watch.The Federal Reserve (Fed)’s leading priority now is to help sustain the US business cycle, hence the concept of ‘insurance’ rate cuts put forward by Fed chairman Jerome Powell, with some echoes of Alan Greenspan’s philosophy in the 1990s.Low Fed interest rates tend to percolate quickly down to the...

The CIO Office's view of the week ahead.In his testimony to Congress last week, Fed chairman Jerome Powell delivered a dovish report, reinforcing current expectations for a rate cut later this month. He focused on mounting risks to the US economy due to slowing global growth and persistent trade uncertainty over June’s strong US jobs report. Despite a higher-than-expected CPI inflation print for June, consistently low inflation remains the central bank’s main concern. Because the Fed is...

The Fed will likely cut rates by 25 basis points on 31 July, with a similar cut possible as early as September. During his testimony before the House of Representatives on Wednesday, Federal Reserve Chairman Jerome Powell repeated the dovish signals he gave at the Fed press conference in June, hinting at a rate cut at the next Federal Open Market Committee (FOMC) meeting on 31 July. Powell’s priority is to preserve the...

The resignation of the Mexican finance minister raises further questions over prospects for Mexican assets.Carlos Urzúa, the Mexican Finance Minister, unexpectedly quit on Tuesday. His resignation, announced in a letter in which he set out the “many” disputes he had had with the administration of president Andrés Manuel López Obrador (AMLO), is meaningful from several standpoints. A respected official, Urzúa was seen by financial markets as a moderate, whose commitment to fiscal prudence...