Tag Archives: Macroview

The Fed remains upbeat on growth and its members may be tempted to raise their rate expectations.Fed Chair Jerome Powell highlighted continuity with Janet Yellen’s monetary policy in his testimony before Congress today.He highlighted “positive developments” since the December meeting. This could be a hint that an additional rate hike could be in the pipeline (The Fed indicated three rate hikes in the December dot plot).Reading between the lines, it remains clear that the Powell Fed will not...

The proposals would pave the way for Xi Jinping to remain in power beyond 2022, helping ensure policy continuity.According to Xinhua News Agency, the Central Committee of the Communist Party of China (CPC) has proposed a number of amendments to the Chinese constitution, pending ratification at the upcoming National People’s Congress. One important amendment proposed is removal of the term limits for the president and the vice president of China, which paves the road for Xi Jinping to stay as...

There was a broad-based setback in euro area business surveys in February, whether in terms of country or of sector. The Flash composite PMI slipped to 57.5 in February from 58.8 in January. The month-to-month dip was the biggest since 2014. National business surveys painted a similar picture. In Germany, the Ifo business climate index dropped by 2.2 points to 115.4 in February, from an all-time high of 117.6 in...

European banks continue to be subsidized via cheap ECB funding. The ECB launched a second series of Targeted Long-Term Refinancing Operations (TLTRO-II) in March 2016 with the specific objective of boosting bank credit. Today’s M3 report, including bank credit flows for January 2018, will be used to calculate the interest rate applied on TLTRO-II loans, which amount to EUR740bn in aggregate.With the notable exception of Italy, Portugal and the Netherlands, we estimate that most commercial...

Just ahead of Sunday’s general election, there is little sign of appetite among the leading parties to tackle the significant challenges that Italy faces.According to the last polls published before the blackout period, no single party or coalition is projected to win an outright majority in the Italian general election next Sunday. Given cyclical growth, near-term economic risks seem to be contained, but Italy’s potential growth rate is low, and youth unemployment is among the highest in...

The start of the year has seen the Japanese yen and Swiss franc appreciate strongly against the US dollar (they rose by 5.6% and 4.4% respectively between 1 January and 22 February) despite higher US yields. However, this rise in US yields came with heightened market volatility, favouring safe haven currencies such as the yen and franc. Indeed, both currencies are characterised by structurally large domestic current...

In spite of rate differentials, the dynamics driving US Treasuries and possible changes in global growth may limit yen and franc decline.The start of the year has seen the Japanese yen and Swiss franc appreciate strongly against the US dollar (they rose by 5.6% and 4.4% respectively between 1 January and 22 February) despite higher US yields. However, this rise in US yields came with heightened market volatility, favouring safe haven currencies such as the yen and franc.Indeed, both...

Latest business surveys surprise on the downside, but still indicate that economic expansion remains strong.There was a broad-based setback in euro area business surveys in February, whether in terms of country or of sector. The Flash composite PMI slipped to 57.5 in February from 58.8 in January. The month-to-month dip was the biggest since 2014.National business surveys painted a similar picture. In Germany, the Ifo business climate index dropped by 2.2 points to 115.4 in February, from an...

The IHS Markit flash composite purchasing managers’ index (PMI) for the euro area eased to 57.5 in February from 58.8 in January, below consensus expectations (58.4). The index marked its the largest monthly decrease since August 2014. Activity in both services PMI (-1.3 points to 56.7) and manufacturing (-1.1 points to 58.5) cooled in February. But while the breakdown by sub-indices showed that the pace of growth in...

Reforms to the rules governing offshore profits will have an impact on trade stats with other countries, especially Ireland.The US tax bill, enacted last December, could lead to dramatic changes in US international trade statistics – and particularly a lower trade balance, although it is not exactly certain to what extent. Indeed, alongside the tax bill’s headline cut of the statutory corporate tax rate from 35% to 21%, it contains some important reforms to the rules governing US...