Macroview

Japanese equities bolstered by the Bank of Japan

Japanese equities received net inflows in March. Nevertheless, foreigners were net sellers – with the highest monthly net foreign redemptions in the past 18 months. Thanks to the Bank of Japan’s (BoJ) purchases of Exchange Traded Funds (ETFs), there have still been net inflows into Japanese equities despite the strong foreign outflows. The BoJ is […]

China growth sustained in Q1 but moderation expected through 2018

Chinese GDP in Q1 2018 came in at Rmb19.9 trillion (about USD3.2 trillion), rising 6.8% year-over-year (y-o-y) in real terms. The growth rate is the same as in H2 2017 and beats the market consensus (6.7%) and our own forecast (6.6%). Details of the GDP report show strong signs of economic rebalancing. Traditional drivers of […]

Russian rouble: significantly undervalued but quite risky

On 6 April, the Trump Administration announced additional and more severe sanctions against Russia “in response to the totality of the Russian government’s ongoing and increasingly brazen pattern of malign activity around the world”. These sanctions confirm a tougher stance of the US Congress against Russia. Following the announcement, the Russian rouble depreciated significantly against […]

US chart of the week – Two-tier job market

The latest release of the Atlanta Federal Reserve series on median wage growth provides interesting clues about the current US wage puzzle – i.e. the question why US wage growth remains tame despite the very tight labour market (the unemployment rate was only 4.1% in March). Of particular interest is the widening gap between wage […]

NAFTA update – All’s well that ends well?

Having progressed slowly for several weeks, the NAFTA (North America Free Trade Agreement) renegotiation talks seem to have found some fresh impetus lately, with several officials suggesting that a deal could be reached as soon as early May. A trilateral meeting will take place in Washington DC this Thursday on the margins of the G20 finance […]

Switzerland, still on the monitoring list

The US Department of Treasury has just published its semi-annual report on International Economic and Exchange Rate Policies. The main news was the inclusion of India on the department’s monitoring list, together with five other countries (China, Japan, Korea, Germany and Switzerland). The Treasury has established three criteria for a country to be deemed a […]

Japanese wage growth accelerates

Anaemic in the past couple of years, wage growth in Japan finally seems to be picking up. In January and February 2018, the average nominal cash earnings of Japanese workers grew by 1.2% and 1.3% year-over-year (y-o-y) respectively, compared with average growth of 0.4% y-o-y in the previous 12 months. In our view, the rise […]

Congressional Budget Office does not believe US tax cuts will ‘pay for themselves’

  The Congressional Budget Office (CBO), a bipartisan budget body reporting to US lawmakers, released a fresh 10-year economic and budget outlook earlier this week, incorporating the effects of both the December tax cuts and the March Congressional spending deal. The news is not great. The CBO seems half convinced about the medium-term benefits of […]

Hard data proves soft in the euro area

Euro area industrial production (excluding construction) was weak in February (-0.8% m-o-m) and follows the recent release of other disappointing pieces of hard data such as retail sales, German factory orders and trade. Based on available ‘hard’ data, real GDP growth rate in the euro area is projected to be 0.1-0.2% q-o-q in Q1 2018, […]

US chart of the week – Car deflation

March CPI inflation was relatively muted. Core inflation rose a relatively moderate 0.18% m-o-m, the same as in February, and below January’s 0.35% m-o-m rise. What this shows is that while core inflation is gradually improving – echoing the improvement in the US economy – fears of inflation getting out of hand are still proving […]

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