Tag Archives: Macroview

December’s US tax cuts – which saw corporate taxation reduced particularly sharply – are being echoed in signs that ‘animal spirits’ are finally kicking in. Both set the stage, in our view, for higher US growth, in large part driven by greater investment. We therefore upgrade our 2018 US growth forecast from 2.0% to 3.0%. We forecast that real non-residential investment growth will accelerate to 7.0% in 2018, up from an...

Euro area real GDP expanded in Q4, in line with expectations but marginally less than in Q3. We forecast GDP growth of 2.3% in 2018, with near-term upside risks.According to Eurostat’s preliminary estimate, euro area real GDP rose by 0.6% q-o-q in Q4 (2.3% q-o-q annualised; 2.7% y-o-y), in line with consensus expectations but slightly less than its upwardly-revised 0.7% q-o-q increase in Q3.The euro area economy expanded by 2.5% in 2017 overall, its fastest annual growth since 2007. The...

Taking into account last December’s fiscal reforms in the US, we have revised up our end-of-the year target for the 10-year Treasury yield.Given our expectations of a rebound in core inflation, accelerating growth and a faster rise in the Fed funds rate this year, we now expect the 10-year US Treasury yield to rise from 2.7% as of 29 January to 3.0% by the end of 2018 (our previous forecast for end-2018 was 2.6%). This rise is likely to be driven by both inflation expectations and TIPS...

Pictet Wealth Management’s view on prospects for Japanese growth, for the yen, and for Japanese bonds and equities.Japanese growth momentum is at its strongest in over a decade, with the quarterly Tankan survey of business conditions and sentiment strengthening to an 11-year high in Q4 2017. The Japanese economy may have expanded by 1.8% in 2017, up from 0.9% in 2016. In 2018, the growth rate may moderate slightly to 1.3%, but should remain well above Japan’s long-term potential. Inflation...

With a rate hike very unlikely to be announced at the Fed’s January 30-31 meeting, the focus will be on the post-meeting statement, which could contain some moderate hawkish hints.The Fed meets on 30-31 January, a ‘tier 2’ meeting as there will be no press conference nor new economic projections. Rates should remain on hold. Still, the Fed could drop some hints that its optimism about the US and global economy is on the rise.We think this increased optimism will pave the way for higher 2018...

The recent US tax cuts and abundant signs of increased corporate investment have led us to raise our forecast for growth and inflation in the US this year and next.December’s US tax cuts – which saw corporate taxation sharply reduced– are being echoed in signs that ‘animal spirits’ are finally kicking in. Both set the stage, in our view, for higher US growth, in large part driven by greater investment. We have raised our 2018 US growth forecast to 3.0% (from a previous forecast of 2.0%), as...

Professional Forecasters survey shows a substantial improvement in economic growth and employment, consistent with the ECB’s own assessment. The ECB will be pleased by its latest Survey of Professional Forecasters (SPF). The headlines are unambiguously positive, fuelled by the uninterrupted improvement in economic data, with expectations of GDP growth and HICP inflation revised higher for the next couple of years,...

The Chinese economy ended 2017 on a strong note. In Q4 2017, China’s GDP amounted to Rmb23.4 trillion (about USD3.7 trillion), rising 1.6% over the previous quarter and 6.8% year-over-year (y-o-y) in real terms. Full-year GDP came in at Rmb82.7 trillion (about USD12.9 trillion), growing by 6.9% in real terms and beating the consensus forecast as well as our own estimate (both at 6.8%). The strong 2017 growth number...

Professional Forecasters survey shows a substantial improvement in economic growth and employment, consistent with the ECB’s own assessment.The ECB will be pleased by its latest Survey of Professional Forecasters (SPF). The headlines are unambiguously positive, fuelled by the uninterrupted improvement in economic data, with expectations of GDP growth and HICP inflation revised higher for the next couple of years, sometimes substantially. Euro area GDP is now expected to expand by 2.3% in...

One of the major rivalries in the US is that between California and Texas, the country’s biggest and second-biggest states respectively in GDP terms. They have different growth drivers (most notably Silicon Valley in California and the energy industry in Texas), and they also have different political landscapes – and local taxation regimes. But which one’s ahead when it comes to employment growth? The two states were...