Macroview

Weekly View – From trade wars to tech wars

The arrest of Huawei CFO Meng Wanzhou by Canadian officials on a US extradition order brings a new layer of complication to the ongoing US-China trade dispute. Chinese telecoms giant Huawei Technologies has ambitions to be a global leader in the next generation of 5G wireless network technology, which has equipment vendors around the world […]

ECB preview: an end to net asset purchases

At its Governing Council meeting next week, we expect the European Central Bank (ECB) to confirm that its asset purchases will cease at year’s end. However, it is likely to stress that the end of the net asset purchase programme does not represent a tightening of its policy stance. We also think the ECB will […]

US November job numbers paint a strong macro picture

US employment rose by 155,000 in November (+1.7% year on year (y-o-y), decelerating from +237,000 in October. The three-month average dropped as well, but is still a healthy 170,000/month (it was 214,000 up to October 2018). November’s wage growth was unchanged from October’s pace of 3.1% y-o-y. Most cyclical indicators continue to flash green, and […]

Some good news despite likely defeat of Theresa May’s Brexit deal in parliament

Theresa May’s Brexit plan is likely to be defeated in the 11 December (unless postponed) UK parliament vote. The press is currently suggesting a defeat by a margin of around 100 MPs, but if it is higher, then it would seriously handicap the chances of a ‘yes’ in a second vote. A rejection of May’s […]

Yellow vest protests cast cloud over Macron’s reform plans

French protests began on November 17 over hikes in fuel taxes, but have progressively broadened out into an expression of general anger with the French government about the cost of living and high taxes. To calm the situation, the government has dropped the planned fuel tax hike from next year’s budget. Whether or not this […]

Gradual, moderate rise in the 10-year US Treasury yield next year

After an impressive rise in US Treasury yields in 2018, we expect the upward movement in 2019 to be gradual, moderate and driven mainly by further rate hikes by the US Federal Reserve (Fed). We have a year-end target of 3.4% for the 10-year Treasury yield. In light of the limited risk of a sharp […]

Growing Fed doubts as neutral rate comes into sight

The Federal Reserve estimated the theoretical, inflation-adjusted (‘real’) neutral rate at 0.8% in Q3 18, slightly down from 0.9% in Q2, but in line with the average since 2016. Adding core PCE inflation of 1.8% year-on-year in October (down from 1.9% in September), this means a ‘spot’ nominal neutral rate of 2.6%. The Fed’s strategy […]

Indian Q3 growth numbers disappoint

Indian GDP in Q3 2018 rose 7.1% year-over-year (y-o-y) in real terms, down from 8.2% in Q2 and significantly below the consensus and our own forecasts of 7.5%. As a result, we have revised down our fiscal year (FY) 2018-2019 GDP forecast for India to 7.2% from 7.6% previously. Our forecast for FY 2019-2020 remains […]

House View, December 2018

Asset Allocation We remain neutral on global equities overall, seeing relatively limited potential for developed market stocks in particular as earnings growth declines. We favour companies with pricing power as well as measurable growth drivers and low leverage. We have moved from underweight to neutral in US Treasuries, as the rise in yields slows. But […]

US and China reach tariff truce

A temporary trade truce was agreed between US President Donald Trump and China’s President Xi Jinping at a dinner during the G20 meeting this weekend. As part of this truce, the tariff rate on USD200 billion of Chinese imports will stay unchanged at 10% up to 1 March, instead of increasing to 25%, as planned, […]

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