Tag Archives: Macroview

While the recent economic ‘soft patch’ has hurt all the main euro area economies, some have been more affected more than others. A divergence in fortunes can be seen across asset classes.The four biggest euro area economies slowed in H1 2018 due to a number of factors, including weak exports. We expect a rebound in H2—except in Italy, where political uncertainty has been denting business confidence. Forward indicators show that Italy is the only of the four major euro area economies to face...

The latest US levies on USD200bn of Chinese imports could leave some room for negotiation before the tariff rate is increased.The Trump administration has announced new tariffs on USD200 billion of Chinese imports, initially at a rate of 10%, rising to 25% in January. This new wave of tariffs comes on top of the USD50 billion taxed over the summer at a rate of 25%. Trump has also threatened to impose levies on all remaining imports from China (worth an additional USD276 billion) if China...

But we expect further growth moderation before a slight rebound at the end of the year.Latest data releases from China broadly point to stabilisation in activity in August after a notable deceleration in the previous months. Industrial production, retail sales and fixed-asset investment all rebounded slightly last month. While the data releases seem to show some signs of stabilisation, we think growth momentum could remain soft in the near term given a continued decline fixed-asset...

The CIO office’s view of the week ahead.September 15 marked the 10th anniversary of Lehman Brothers’ filing for Chapter 11 bankruptcy protection. Since Lehman’s collapse has come to symbolise a massive financial crisis whose consequences continue to be felt, it is natural for this anniversary to be the occasion for speculation on when and where the next large-scale crisis might occur.Emerging markets (EM) are the weakest link in the eyes of some, even though contagion has been limited to the...

But there is room for further improvement. This week euro area employment data confirmed that labour market recovery remains on track. Employment grew at 0.4% q-o-q in Q2 2018, marking the 20th consecutive quarter of expansion. Employment is now 2.4% above its pre-crisis (2008) level. Since Q2 2013, 9.2 million jobs have been created in the euro area. One development of note is that employment growth has been broad,...

But there is room for further improvement.This week euro area employment data confirmed that labour market recovery remains on track. Employment grew at 0.4% q-o-q in Q2 2018, marking the 20th consecutive quarter of expansion. Employment is now 2.4% above its pre-crisis (2008) level. Since Q2 2013, 9.2 million jobs have been created in the euro area. One development of note is that employment growth has been broad, including many countries that were hard hit by the crisis. Spain and Germany...

The main risk facing ECB watchers is that the next few meetings of the Governing Council will be increasingly boring and predictable. However, from the central bankers’ perspective, this may considered a sign of success, “like a referee whose success is judged by how little his or her decisions intrude into the game itself”, to quote former BoE Governor Mervyn King. Back to the economy, downside risks stemming from...

August CPI data once again underscores ongoing puzzle of a strong US economy creating little inflationary pressure.Core CPI inflation was relatively modest in August, rising only 0.08% month on month, while the year-over-year (y-o-y) rate slowed to 2.2% from 2.4% in July. Core inflation was up only 0.08% m-o-m, and the y-o-y reading slowed to 2.2% from 2.4% in July. This means that for all its recent strength of the economy (underlying growth of 3% and unemployment below 4%), the US is still...

No changes to the ECB’s monetary stance and policy guidance mean we are holding to our forecasts for quantitative easing and rate hikes.The ECB made no change to its monetary stance and policy guidance at its 13 September meeting. The end of quantitative easing (QE) was confirmed for after December, following a final reduction in the pace of net asset purchases to EUR15bn per month in Q4 2018.Much of the focus was on the updated ECB staff projections. In the end, downward revisions were...

A challenging global environment has sapped the appeal of all the EM currencies we track.There have been few changes in our emerging market (EM) currencies scorecard over the past month. Currently, it suggests that no EM currency at present is particularly attractive on a 12-month horizon.August was a particularly harsh month for EM currencies, with the Argentinian peso and the Turkish lira both dropping 25% against the US dollar. While these two currencies were particularly vulnerable to a...