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Business cycle could define Trump’s re-election chances

As we move closer to the 2020 presidential election, Donald Trump has been blatantly leaning on the Federal Reserve to be more accommodative and has been trying to appoint nominees to the Fed board who share his preference for loose monetary policy. The countdown to the 2020 elections also seems to be prompting Trump to […]

The US labour market chugs along

US employment rose by 196,00 in March, bringing the three-month average to a healthy 180,000/month— less than the 2018 average of 223,000, but more than in 2017. The unemployment rate was unchanged at 3.8%, below the Federal Reserve’s (Fed) ‘full employment’ estimate of 4.4%. Wage growth softened to 3.2% year-on-year (y-o-y) from 3.4% in February. […]

Fed meeting review: a strong dovish undertone

The Fed confirmed the end of balance sheet reduction for September 2019. Meanwhile, the dot plot showed an overwhelming majority of members expected no rate hike at all this year (versus two rate increases expected at the December meeting). As expected, Powell took his ‘central banker to the world’ hat, expressed concern about the global […]

Jerome Powell, central banker to the world

We believe the Fed will wear its ‘central banker to the world’ hat during the Federal Open Market Committee meeting on March 19-20. Expressions of continued confidence in the US economy may prove secondary to concerns about Europe (including Brexit ) and China, meaning we expect the Fed to send a dovish message. Meanwhile, the […]

US employment: keeping an eye on the clock

With only 20,000 job additions, the US employment report for February was weak. However, with the three-month average remaining robust at 186,000, we would tend to dismiss this weak print as a mere ‘blip’. Furthermore, the weak reading is inconsistent with other labour market data and indicators, including recent consumer and business surveys. Some details of the report reinforce the […]

US GDP update

Q4 2018 GDP growth was healthy at 2.6% quarter-on-quarter (q-o-q) seasonally adjusted annual rate (SAAR), close to the average over the previous three quarters (2.5%). Annual growth for 2018 was 2.9%. A particularly bright spot in Q4 was business investment, led by spending on equipment and software. Such business investment strength is particularly good news […]

Fed wrap-up: staying dovish

The US Federal Reserve (Fed) is further reinforcing its stance on ceasing its balance sheet shrinkage before year end, essentially yielding to the demands of markets, which have been anxious about the potential for market liquidity shrinkage. Officially, the balance sheet question is still rooted primarily in the technical – commercial banks’ high demand for safe, liquid assets […]

Still moderate US inflation

CPI inflation in January moderated to 1.6% y-o-y, from 1.9% in December (and versus 2.4% on average over the past twelve months). The biggest driver of this moderation was the sharp drop in global oil prices; given recent oil movements, we estimate that headline inflation could slide towards 1% y-o-y in coming months. Excluding energy […]

US jobs report shows recession risk is limited

US employment rose by a solid 304,000 in January (+1.9% year on year, y-o-y), compared with 222,000 in December. The three-month average was a healthy 241,000/month. Meanwhile, the ISM manufacturing survey rose to a robust 56.6 in January from 54.3 in December. Overall, these two pieces of data suggest that US macro momentum remains strong […]

Review of the Federal Reserve’s January meeting

Dovishness was on full display at the Fed meeting on 30 January. The Fed removed its rate tightening bias, and emphasised its “patience” until the next rate move. Chairman Powell seemed particularly anxious about the global growth backdrop and explained the more dovish stance is just “common sense risk management”. Another key focus was the […]

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