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Stagnant tax collection is a further challenge to tax cuts

US fiscal year 2017, which ended on September 30, did not end on a high note. The deficit rose to 3.5% of GDP, edging up 0.3 percentage point from fiscal year 2016. This deterioration stands in stark contrast to the overall improvement in the US economy. GDP growth remains above potential, and unemployment has been […]

Broad-based rebound in euro area credit demand

The ECB’s October Bank Lending Survey (BLS) indicated that credit standards were broadly unchanged in Q3, while some modest easing was expected in Q4. The brightest spot is loan demand, which is expected to rebound for all types of loans moving forward. Net demand for bank loans to enterprises increased further in Q3, in line […]

Small dip in headline PMI hides robust domestic momentum

The euro area composite flash PMI declined to 55.9 in October, from 56.7 in September, below consensus expectations, led by a drop in the services sector which offset an increase in manufacturing. However, survey details were fairly strong, especially in terms of job creation. In Germany, the survey points to robust private sector growth. The […]

Little market reaction to escalating Catalan dispute

The response given by the Catalan President Carles Puigdemont to the Spanish government’s ultimatum last week did not provide the clarity the central government was seeking on whether or not the Catalan parliament would formally declare independence. As a result, the central government therefore has decided to invoke Article 155 of the Spanish constitution, for […]

Still a long road to US tax overhaul

The US Senate this week approved a budget resolution, which effectively allows it to side-step Democrats’ opposition to start formulating tax cuts. The bottom line is that the Senate vote increases the odds of some tax cuts actually happening, but we think that the road to the finish line will be bumpy and that any […]

Euro construction momentum could remain strong

Since the beginning of the year, euro area capital expenditure has picked up noticeably. The acceleration has been mainly driven by the construction sector (which accounts for almost 50% of total capital expenditure), while business equipment has continued to expand strongly. Construction activity is still 19% below its pre-crisis (2008) level, and has room to […]

President Xi reveals grand plans for China

This week, in a speech to the 19th Communist Party Congress, Xi Jinping, party general secretary and the president of China, outlined his vision for China through to 2050. Xi argued that China has embarked on a new stage of development. On the political front, he believed that China has become stronger and will move […]

Contrasting outlooks for precious metals

While gold prices have risen about 12% per troy ounce since the beginning of this year, we still have a constructive view of the gold price over the next 12 to 18 months. But does this mean that the outlook for precious metals in general is positive? Notwithstanding fluctuations in the US dollar, gold has […]

Soft bank lending contrasts with euphoric business sentiment

US business activity seems to be continuing apace and all forward-looking indicators, in particular sentiment surveys, are flashing green. But there is an important blemish in this otherwise rosy picture: bank lending has been soft, and recent data is not showing any signs of an uptick. In September, commercial and industrial (C&I) bank lending was […]

Chinese growth forecast remains intact

Chinese GDP for Q3 2017 came in at Rmb21.2 trillion (USD3.2 trillion), growing by 6.8% y-o-y in real terms, slightly below the pace of expansion in the first half of the year (6.9%). Several points are worth highlighting. First, China’s economic transition is well underway. The tertiary sector, mainly services, continues to be the main […]

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