Macroview

Euro area : Momentum slows at the start of Q3

The composite flash PMI fell to 55.8 in July from 56.4 in May, below consensus expectations (56.2). The headline dip was entirely driven by the manufacturing index, which fell to 56.8 in July from 57.4 in June. By contrast, the services index remained stable at 55.4. The PMI’s forward-looking components remained pretty strong, despite edging […]

Sluggish inflation will keep BoJ on easing for a long time

In July’s monetary policy meeting, the Bank of Japan (BoJ) decided to keep its monetary easing programme unchanged, maintaining its qualitative and quantitative easing (QQE) with yield-curve control (YCC). In addition, the BoJ cut its inflation estimates for the current and next fiscal years, and revised its expectation for hitting its 2% target to one […]

ECB: see you in autumn

At its July meeting, the ECB made no change in its monetary policy statement, as we expected. Importantly, the bias for QE extension “in terms of size and/or duration” was kept in the statement. ECB president Mario Draghi mentioned that the Governing Council (GC) was unanimous in communicating no change to forward guidance. Draghi reiterated […]

Is there an end to the US dollar’s weakness?

Following disappointing US economic data and another failure to form a Republican majority on key legislation, the US dollar has slipped to a 10-month low, at 94.68 on 18 July. This extreme USD weakness has led to strong negative market sentiment, as highlighted by speculative positions on the futures market. Although we acknowledge that the […]

China: GDP beats expectations again in Q2

Chinese GDP for Q2 2017 grew by 6.9% year-on-year (y-o-y) in real terms, the same pace of expansion as in Q1. The growth figure beats both the consensus forecast and our own estimate. We have decided to revise our Chinese GDP growth forecast for 2017 to 6.8% from 6.5%, and the forecast for 2018 to […]

Euro area: Bank credit standards eased slightly in Q2

  The July Bank Lending Survey (BLS), released by the ECB today, showed that bank credit standards for loans to enterprises eased slightly in Q2 2017, following a net easing in the previous quarter. This came despite expectations in the previous survey round that these standards would tighten slightly. Competitive pressure remained the main factor […]

Major currencies’ outlook

Our latest forecasts for major currencies over the coming months can be summarised as follows: US dollar. In terms of duration and valuation, the USD up-cycle is likely close to ending. However, the USD is likely to remain strong on the back of robust US growth and the outlook for inflation. It should also benefit […]

Monthly Investment Strategy Highlights, July 2017

Asset allocation As central bank support starts to be withdrawn, volatility could well rise. We are still slightly long equities, since fundamentals are supportive, but have bought put options on the S&P 500 to guard against downside risks. A rise in volatility will create opportunities for tactical trading and especially hedge funds. Commodities Oil prices […]

US job market remains strong, but wage growth still disappoints

All in all, today’s employment report was healthy. In the end, job creation was actually quite robust overall in Q2, ‘aggregate weekly payrolls’ rose strongly q-o-q, and if unemployment rebounded a little in June, it was only because of higher participation, not a lack of employment growth. However, once again, wage data brought some disappointment, […]

Upbeat PMIs in China point to solid growth momentum in Q2

China’s official manufacturing PMI rose to 51.7 in June, the second highest reading in 2017. The Markit manufacturing PMI also rebounded to 50.4 in June after having dropped below the 50 threshold in the previous month. The rise in both indices in June suggests that China’s growth momentum in the second quarter was likely still […]

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