Macroview

Trump’s fiscal stimulus package may well be delayed

In his first speech to Congress yesterday, President Trump sounded more presidential but was short of specifics on many of his main policy proposals. He once again complained that US companies are facing higher barriers than their foreign counterparts, but didn’t elaborate on how specifically he intended to remedy this situation. Most notably, there was […]

Euro area fiscal stimulus prospects

There has been growing evidence of a shift in the policy mix of various developed economies, from monetary to fiscal. In the euro area, we have likely entered a new cycle where the combination of austerity fatigue and greater flexibility on spending rules leads to more sustained fiscal support, however sub-optimal and uneven across countries […]

Oil currencies offer limited potential

In 2016, the sharp rebound in oil prices and the November Opec deal to cut oil production have been supportive of oil-producer currencies like the Norwegian krone and Canadian dollar. However, we believe the oil price is likely to stabilise at around USD55 in 2017, close to where it already is. In an environment where […]

PMI survey signals sustained euro area expansion in Q1

The euro area composite flash PMI surged to 56.0 in February, the highest reading since April 2011. The main boost came from a surge in the services index due to strong data in Germany and France. The euro area average composite PMI is now consistent with a GDP growth rate of about 0.6% q-o-q in […]

Monthly Investment Strategy Highlights, February 2017

Asset allocation Improved earnings growth should support attractive returns on developed-market equities. We still expect Treasury yields to rise this year. The 35-year fall in long-term interest rates, during which government bonds provided both strong returns and protection, has probably ended. The protection that government bonds provide for portfolios is therefore set to come at […]

Solid U.S. retail sales follow Fed’s upbeat economic assessment

Core retail sales in the US rose by a solid 0.4% m-o-m in January, above consensus expectations. Moreover, December’s figure was revised up. The result was that between Q4 and January, core retail sales grew by a robust 4.2% annualised. We forecast that consumer spending will grow by around 2.2% q-o-q annualised in Q1, after […]

U.S.-China: Trump’s new approach risks a dangerous confrontation

The relationship between the US and China is of vital importance for the world both from an economic and a geopolitical perspective. Competition between the two powers could be set to come to a head under Donald Trump’s presidency. First, the trade relationship with China is a central issue in the Trump administration’s apparent intention […]

Systemic risks remain low ahead of euro area elections

There are good reasons for investors to worry about political risks in Europe. The most legitimate concerns, in our view, come from the timing of elections this year in the largest euro area countries. They are coming against the backdrop of a broad shift towards protectionism, and at a time when ECB support is being […]

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 […]

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