With the faltering in euro area business sentiment since February, the Italy-led sell-off of risk assets at the end of May and the European Central Bank’s (ECB) dovish meeting in June, we are revising our year-end forecast for the German 10-year Bund yield from 0.9% to 0.6%, as we hinted we might do in a […]
After the steel and aluminium tariffs introduced in early June, another stage was reached last week when the Trump Administration announced that further tariffs specifically aimed at imports from China will kick in on 6 July (first on USD34 billion of imports, to be followed shortly thereafter by tariffs on a further USD16 billion). The […]
The ECB’s commitment on rates announced at its June monetary policy meeting showed it remains very prudent. Given recent unsupportive data, the euro likely faces high hurdles to significant appreciation in the short term. Macro data in the euro area may not be supportive in the very short term, with Q2 GDP likely to be […]
The US will hit USD34 billion (out of a total of USD500 billion) of imports from China with a 25% trade tariff, effective 6 July. The official reason is to sanction China’s intellectual property theft and to fire a warning shot against the ‘Made in China 2025’ industrial policy. This move has prompted retaliatory measures […]
Trade disputes between the US and almost everybody else are reaching a climax, with US tariffs on imports prompting inevitable retaliation. Things could get worse before they get better, if President Trump puts his words into action. At this stage, global growth indicators are still flashing green and we have some hope that tough negotiations […]
Last weekend’s G7 summit in Canada ended badly, with President Trump withdrawing his support for the summit’s final statement. Heightening tensions between Europe and the US are Trump’s hints that the White House is considering import tariffs on cars and car parts. German firms would be the most impacted if such tariffs were introduced. According […]
Based on its upgraded assessment of the inflation outlook, the ECB delivered the QE tapering that the market expected, signalling the end of net asset purchases in December 2018 following a final three-month extension of EUR15bn per month. Importantly, today’s decision is flexible and conditional, “subject to incoming data” confirming the inflation outlook. Still, the […]
At 132% of GDP, Italy has the second-highest public debt load in the euro area after Greece. Italy’s debt ratio has remained broadly stable over the past five years, but the sustainability of public debt remains highly vulnerable to shocks, let alone a recession or financial crisis. In addition, there are still lots of questions […]
As widely expected, on 13 June the Federal Reserve raised its Fed funds target rate range by 25bps (and the interest rate on excess reserves by 20bps), bringing the range to 1.75-2.0%. The ‘dot plot’ median (Fed members’ forecasts of future rate hikes) rose from three rate hikes in 2018 to four. Fed members still […]
Amid all the good macro signals from the US economy lately (see our Flash Note about May payrolls, for instance), new car sales present a mixed picture. Car sales have virtually plateaued in the US, averaging 17.06 million so far this year (January-May), up only +0.3% from the same period last year. One way to […]
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