Macroview

Signs of global rebound are appearing

At its Spring Meeting, the International Monetary Fund (IMF) revised downward its 2019 global growth forecast from 3.5% to 3.3% (the same as our own forecast). The IMF left its estimate for 2020 growth unchanged at 3.6% As global growth probably slowed to 3.2% in the second half of 2018, a 3.3% growth estimate for […]

Getting ready for tiering

Although back in 2016 the European Central Bank (ECB) ruled out tiering of bank reserves to mitigate the side effects of negative rates, the situation has since changed, and it could be implemented eventually if policy rates were to remain negative into 2020. Despite nearly four years of asset purchases and five years of negative […]

India: RBI cuts interest rate again

The Reserve Bank of India (RBI) cut its policy interest rate (RBI repo rate) by 25 basis points (bps) last week, bringing it down to 6.0%. This was the RBI’s second interest rate cut this year under its new governor Shaktikanta Das. With this move, the RBI has fully reversed last year’s rate hikes. Since the change of […]

Weekly View – Flextension?

Risk assets were positive across the board last week, with volatility falling back into low territory. The rally was driven by encouraging signs from the world’s two biggest economies. In China, a turn in economic indicators has started to show through with manufacturing purchasing manager indices (PMI) moving back into expansion territory in March. At […]

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. […]

US and euro investment-grade credits: similar, but different

US and euro investment grade (IG) indices have posted solid returns year-to-date thanks to a rally in credit spreads and sovereign yields linked to the dovish turn taken by some large central banks. We have turned neutral from underweight on euro IG credit, while retaining our underweight stance on US IG credit. First, euro IG […]

Q&A on European Parliament elections

European Parliament (EP) elections will be a key political event in Europe, a form of ‘midterm election’ in which the electorates can state their approval or disapproval of their respective national governments. Turnout in EP elections has been on a downward trend over the past four decades, dropping from 62% to 43% since 1979. A crucial question is whether […]

House View, April 2019

Asset Allocation Although we expect the economic picture to brighten and the decline in earnings expectations to end, we have a prudent stance on global equities, as expressed in our decision to book some profits on global equities and to invest in put options on large-cap European and small-cap US equities. At the same time, […]

China PMIs jump in March

Chinese PMI readings moved back into expansion territory in March. The official Chinese manufacturing PMI rose to 50.5, up from 49.2 in February, and beating the Bloomberg consensus of 49.6, while the Caixin manufacturing PMI came in at 50.8, also up from 49.9 in February and beating the consensus expectation of 50.0. Details of the PMI survey report generally point […]

Weekly View – Cautious steps forward

Good news came from the world’s second-largest economy after China’s manufacturing sector resumed growth in March, following three consecutive months of contraction. Employment in the sector also grew and new export orders even managed to move back into expansion territory, despite continued uncertainty around the outcome of trade talks between China and the US. We […]

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