After last year’s collapse, oil prices have found support since the beginning of this year for several reasons. At this stage, the main question is whether the recent surge in prices is sustainable or whether we will see renewed oil price volatility, with the possibility of a repeat of 2018. The recent release of the […]
Germany’s leading indicator, the Ifo index, rose in March, driven by an increase in both sub-components: current assessment and expectations. The Ifo index differs in make-up from Markit’s purchasing manager indices, but at the sector level, the story is the same: the more domestically-driven services sector is showing signs of resilience, while the most export-oriented […]
Last week, the 10-year US Treasury yield dipped below the yield on the 3-month bill for the first time since 2007, a year before the last recession. Should we be worried? Not excessively. Yes, the Federal Reserve has lowered its rates and growth forecast (just like the European Central Bank – ECB – before it), […]
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 […]
The latest economic indicators show that Chinese growth momentum remained soft in January and February, consistent with our expectations. Industrial activity was especially weak, weighed down by the mining and utility sectors. Growth in fixed asset investment improved slightly, mainly driven by the acceleration in property investment, but investment in the manufacturing sector declined. However, […]
The sharp deterioration of Brazil’s public debt in recent years, triggered by a deep recession in 2014-2016, now requires the imminent restoration of fiscal balance in order to bring public finances back on to a more sustainable path. In this regard, pension reform is widely seen as the single largest source of long-term fiscal savings, […]
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 […]
Last week, “Brextension” was confirmed by the UK Parliament, which voted in favour of a Brexit delay by 413 to 202. However, we are far from out of the woods yet as the EU must next approve the request, for which the UK must offer a satisfactory justification as to why they need it and […]
The British Parliament concluded a series of votes on Brexit this week with an intention to extend the 29 March Brexit deadline. What remains unclear at this point is whether the UK will seek a short (two months) or a longer extension (two years). It is also not clear what this extension would be used for. A longer extension would help to […]
The euro fell to a 20-month low against the US dollar following the European Central Bank’s (ECB) March policy meeting, given the revised forward guidance that suggests that the interest rate differential is unlikely to provide much upside to the euro in the next few months. That being said, recent euro area PMI surveys tend […]
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