Macroview

The populist wave may be yet to peak

Populist parties have been on the rise in Western democracies in recent years. They have already achieved two landmark successes, with Brexit and Trump, and are threatening breakthroughs elsewhere. We see six main drivers of the populist surge: rising economic insecurity, globalisation, a technological innovation shock, cultural backlash, broader socio-economic change, and fragmentation of information […]

Euro area business confidence remains strong

The euro area May PMI indices remained consistent with Mario Draghi’s assessment of the ongoing recovery as “solid and broad”. The composite flash PMI remained stable at 56.8 in May, against expectations of a small decline. This apparent stability masked further improvement in the largest member states as business confidence outperformed in the French services […]

The ECB debates sequencing of policy moves

Recent comments from ECB executive board member Benoît Coeuré have confirmed that the ECB is likely to make further changes to its communication at its 8 June meeting, moving towards a neutral stance despite a likely downward revision to the 2017 inflation staff forecast. Importantly, Coeuré sounded open to further changes to the ECB’s forward […]

Crypto-currencies in a bubble

Pictet’s inhouse quantitative analysis can provide ways of spotting certain kinds of bubble and predicting when they will burst (see article ‘Forecasting Financial Extremes’). One aspect of this analysis is focused on investor herding behaviour, as measured by the combination of super-exponential cycles and ever faster oscillations around those cycles. Peaks and troughs in these […]

Oil prices: limited upside potential

The market was highly optimistic about the oil price at the beginning of this year, with oil analysts expecting that prices would have recovered to USD60-65 by now. These hopes have clearly been dashed, as WTI prices have fluctuated in a range of USD45-55 since January 1. We have been much less optimistic than the […]

Chinese growth momentum moderates

  Economic indicators for April point to some softening in growth momentum in China. Hard data confirm the moderation seen in manufacturing and non-manufacturing PMIs released earlier this month, and the direction of change is consistent with our expectation that Q1 marked the peak of growth momentum in China for 2017. In our view, the […]

US Treasuries cast doubt on Trumponomics

At the beginning of 2017, in our outlook for sovereign bonds, we forecasted that the 10-year US Treasury yield would rise to 2.8-3% by year’s end. However, yields have been stuck in a range of 2.2-2.6%, so a review looks warranted. Indeed, the risk has increased of an alternative to the core scenario, but we […]

U.S. consumer spending showing signs of rebound

  Core retail sales in the US rose by 0.2% m-o-m in April, below consensus expectations (+0.4%). However, retail sales for March were revised up by 0.2%. The result was that between Q1 and April, nominal core retail sales grew by a healthy 3.6% annualised, following an increase of 3.5% q-o-q in Q1 and 3.1% […]

Monthly Investment Strategy Highlights, May 2017

 Asset Allocation Markets are starting to revise their expectations for the Trump administration. We still see some prospect of a US fiscal stimulus, but it is likely to be later (not kicking in before 2018) and less ambitious than hoped. Improving economic performance and strong earnings growth support our positive stance on DM equities, despite […]

US unemployment falls to fresh cyclical low

  Non-farm payroll employment rose by a solid 211,000 in April, above consensus expectations. Unexpectedly, the US unemployment rate continued to fall from 4.5% in March to 4.4% in April, and is now significantly below the Fed’s median estimate for full employment (4.8%). However, wage data were somewhat disappointing, with the pace of hourly wage […]

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