Macroview

Japan: an export-led recovery is underway

The first preliminary reading of Japan’s real GDP growth for Q4 2016 came in at 1% q-o-q annualised, roughly in line with the consensus forecast of 1.1% but below the 1.3% growth in Q3. The growth in Q4 almost all came from external demand (+1.0%), while the contribution from domestic demand was virtually 0%. Japanese […]

Currency opportunities emerge Down Under

At their February monetary meeting, both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) kept their official cash rates unchanged at 1.50% and 1.75% respectively. However, given our view that New Zealand’s economic fundamentals are better than Australia’s, the temporary weakness of the New Zealand dollar that stemmed from […]

The potential impact of a Trump fiscal stimulus

Our core scenario for the US is for real GDP growth of 2% in 2017 and 2.3% in 2018. This assumes that fiscal policy will be only modestly stimulative. However, with the election of Donald Trump as US president, the possibility of a radical change in public policy has increased markedly—possibilities, which enter into our […]

Wage growth eases in the U.S. despite strong job creation

Non-farm payroll employment in the US rose by 227,000 month on month in December, above consensus expectations (180,000). The unemployment rate rose slightly further, to 4.8% in December while the broader U6 unemployment rate rebounded to 9.4%. Overall, however, the underlying picture remains one of ongoing improvement in US labour market conditions. As we highlighted in […]

US dollar looks well supported this year

Our latest forecasts for individual currencies in 2017 can be summarised as follows: US dollar. The USD is likely to remain strong on the back of an improving US growth and inflation outlook as well as continued monetary policy divergence. Our base case scenario is for a Trump administration that puts the emphasis on growth […]

US inflation still low at end-2016, our forecast unchanged for 2017

Core PCE inflation in the US settled at 1.7% y-o-y in December, in line with consensus and exactly the same rate as in February 2016. We continue to believe that PCE core inflation will pick up only modestly in 2017, ending the year at around 2.1%. Following a significant pick-up between October 2015 and February […]

Euro area: latest figures raise our 2017 GDP forecast to 1.5%

Euro area real GDP expanded by 0.5% q-o-q in the fourth quarter, marking an acceleration from Q3’s 0.4% gain. The euro area economy grew at an annual average of 1.7% in 2016, compared with 1.9% in 2015. Last year was the first time since 2008 that real GDP growth in the euro area was above […]

Inflation and the ECB (part 1): the four criteria

Although euro area headline inflation jumped to 1.8% in January, the closest it has been to the ECB’s 2% target since Q1 2013, core inflation remained low at 0.9%. We continue to expect the ECB to wait until September before it announces a tapering of its asset purchases in 2018. A “sustained adjustment in inflation” […]

Euro area: strong rebound in bank lending

Euro area credit flows to non-financial corporations increased again in December, by EUR13 bn in adjusted terms. The large rebound in long-terms loans, in particular, bodes well for business investment spending. With loans to households still expanding at a healthy pace (+EUR9 bn in December), the annual growth rate of bank credit to the non-financial […]

US GDP picked up in 2H 2016; outlook for 2017 unchanged

US GDP growth decelerated from 3.5% in Q3 to 1.9% quarter-on-quarter annualised in Q4, below consensus expectations of 2.2%. However, this soft reading was mainly due to a reversal of the surge in soybean exports in the previous quarter, while growth in final domestic demand picked up from 2.1% in Q3 to 2.5% in Q4. […]

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