Tag Archives: Macroview

In spite of prospects for a moderate upturn, monetary policy is clearly showing its limits, with structural reforms needed to improve Japan’s economic outlook.At its latest policy meeting on November 1, the Bank of Japan (BoJ) elected to keep its “Quantitative and Qualitative Monetary Easing (QQE) with Yield Curve Control” policy unchanged and did not announce any further easing measures. In addition, the BoJ revised the trajectory of its inflation projections downward to better reflect...

October data suggests China continues to regain momentum, justifying our decision to raise our growth forecast for this year. But we still expect growth to slow in 2017.China’s purchasing manager indices (PMIs) rose strongly in October. Both the official and the Caixin manufacturing PMIs came in at 51.2 , reaching their highest levels since August 2014. The official non-manufacturing PMIs also rose noticeable in October. The strong figures indicate that the improving growth momentum in China...

Amid conflicting wage signals and low inflation expectations, core US prices look like rising only gradually to end 2017.Core US personal consumption expenditure (PCE) inflation remained stable at 1.7% year on year (y-o-y) in September, in line with consensus expectations. We continue to believe that core PCE inflation will pick up modestly over the coming months. Our forecast that it will reach 1.9% y-o-y by year-end and 2.1% in December 2017 remains unchanged.Labour market slack has...

With the ECB still concerned about weak dynamics in core prices and wages, we believe a 6-month extension of QE will be announced in December, with asset purchases of EUR80 bn per month.Euro area flash HICP inflation rose from 0.4% year on year (y-o-y) in September to 0.5% in October, while core inflation remained stable at 0.8%. Both figures were in line with market expectations. However, the details behind the core inflation figure were slightly weaker than expected.Euro area inflation is...

3Q GDP growth in the euro area met expectations. The play off between strong business indicators and weak-ish credit dynamics means we maintain our full-year growth forecast of 1.5% in 2016.Euro area real GDP expanded at a quarter-on-quarter (q-o-q) rate of 0.3% in Q2 (1.4% q-o-q annualised, 1.6% year on year), in line with expectations and our own forecast. This comes after GDP growth of 0.3% q-o-q in Q2 and 0.5% q-o-q in Q1.Looking ahead, risks to our scenario for the euro area economy...

3Q GDP growth was flattered by a temporary surge in soybean exports, while consumer spending was disappointing. However, our 2016 and 2017 growth forecasts remain unchanged.On the back of a temporary surge in exports, real US GDP grew by a strong 2.9% in Q3, above consensus expectations. Our yearly average forecasts that US GDP will grow by 1.5% in 2016 and 2.0% in 2017 remain unchanged. The robust rate of expansion in Q3 needs to put in proper context. First, it is partly linked to a...

While growth in the UK and Spain is proving resilient, it is expected to slow in both places next year, while growth in France will remain moderate.This week saw the release of preliminary third-quarter GDP numbers in the UK, France and Spain. Following stronger-than-expected GDP growth (+0.5% q-on-q in the third quarter), we have revised our growth forecast for the UK higher, to 2.0% in 2016, (up from an earlier estimate of 1.8%). However, we still expect the fallout from the Brexit...

Data pose a downside risk for GDP forecast and strengthens case for additional ECB intervention.Euro area bank credit flows to non-financial corporations (NFC) were pretty disappointing in September (coming in flat after a decline of EUR 1bn in August). On a country by country basis, NFC flows were positive for the four biggest economies, but not enough to bring the 3-month average back into positive territory in Italy and Spain. On a brighter note, credit flows to euro area households rose...

Markit Flash PMI surveys for October were above consensus and there was a considerable improvement in sentiment in Germany, possibly pointing to stronger Q4 GDP figures. Euro area business surveys just released show a solid start to the fourth quarter. More importantly still, these forward-looking indicators suggested that growth is likely to gain momentum in the months ahead, in particular in Germany. The good performance of the German manufacturing sector suggests that external demand...

Macroview There is a risk that government will not be able to serve full term, but markets are now becoming more focused on the Italian referendum in December. After 10 months of political impasse, Spain is set to have a new government at the end of this week. The decision by the Socialist party (PSOE) to abstain in the second parliament investiture vote clears the way for a minority government to be formed under prime minister Mariano Rajoy and thus avoids the need for a third general...