Macroview

Watch out for a rebound in euro area core HICP in November

This week’s final euro area HICP report has provided us and the ECB with greater clarity over the drivers of the surprisingly large fall in core HICP inflation, from 1.11% to 0.89% year-on-year in October. The drop was largely led by one-off moves in Germany (airfares, package holidays) and by education prices in Italy. Although […]

China government may tolerate lower growth

The latest Chinese economic data for October indicate the moderate deceleration in growth already seen in Q3 is extending into Q4. Both exports and domestic demand have slowed, particularly in terms of fixed-asset investment. National fiscal spending has shown signs of slowing, and central government has cut off support for some regional infrastructure projects on […]

Latest Japan GDP data point to moderate deceleration

  Japanese GDP for Q3 came in at JPY545.8 trillion annualised, rising 1.4% q-o-q and 1.7% y-o-y in real terms. The data are broadly consistent with our view of a moderate deceleration of the Japanese economy in H2 after a strong Q2. The positive growth in Q3 marks the seventh consecutive quarter of economic expansion […]

US business cycle celebrates its 100-month anniversary

The US expansion, which started in July 2009, just crossed its 100-month mark, making it – for now – the third longest in the National Bureau of Economic Research database, which stretches back to 1854. The longest growth was 119 months between April 1991 and February 2001. The exceptional length of this expansion, already well […]

The euro area recovery is continuing to broaden out

Euro area headline GDP growth was confirmed at 0.6% q-o-q in Q3. At the country level, Germany surprised to the upside, posting GDP growth of 0.8% q-o-q in Q3 and beating consensus expectations. The impressive performance was driven by exports and investment in equipment and machinery. Turning to Italy, economic activity strengthened in Q3. After […]

House View, November 2017

Asset allocation We remain constructive on equities, which are being underpinned in particular by robust earnings growth. However, there are signs of pressure, especially in forex markets, and occasional spikes in volatility are likely, notably as a result of geopolitical risk. It is worth considering risk mitigation for portfolios put options on equity indices are […]

US growth forecast raised

We are raising our US GDP forecast for 2017 (+0.1 percentage point to 2.3%) and 2018 (+0.3 point to 2.0%) on the back of stronger momentum in Q4 2017. Accelerating global growth is a tailwind for the US economy – as seen in the recent sharp pick-up in exports, particularly to emerging markets. Reconstruction efforts […]

No rate hike support in sight for antipodean currencies

At their November monetary meeting, both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) kept their official cash rates unchanged at, respectively, 1.50% and 1.75%. The RBA sounded relatively cautious given low wage growth and high household debt. The RBNZ was more upbeat in light of the potential for […]

ECB, in search of a comprehensive strategy to tackle bad loans

The ECB has become under renewed pressure over its recent guidance on non-performing loans (NPL) and its plan to force banks to increase provisions against bad loans. The backlash, including at this week’s European parliament hearing of Danièle Nouy, Chair of the Supervisory Board, was fuelled by various gripes, including whether the ECB has gone […]

Low loan demand: a bad omen for investment

A key question for the 2018 US outlook, and beyond, is whether US firms will finally open their purses and invest more after years of frugality. Investment is key to sustaining the current expansion. Recent buoyant business surveys like the ISM manufacturing index seem to point that way. However, a chasm has opened between what […]

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