ECB rates and TLTRO-III: the devil in the details

Last week, the European Central Bank (ECB) announced a new long-term refinancing package for banks (called TLTRO-III) and made clear that interest rates would not be raised this year. While these measures were expected, they have come earlier than we thought. We were also taken aback by the extent of the downside revisions to the […]

German economy set to recover

Germany’s economy weakened significantly in the second half of 2018. External headwinds remain strong and, in an environment where monetary-policy ammunition remains limited, all eyes have shifted towards German fiscal policy, especially as the country has generated significant budget surpluses since 2011. Beyond the already implemented 2019 fiscal stimulus, the country has fiscal space amounting […]

Global indicators: manufacturing sentiment declines

After recent downward revisions to our US and euro area GDP forecasts and against a backdrop of declining global manufacturing sentiment, we have revised our world real GDP growth forecast for 2019 to 3.3% from 3.5% previously. Manufacturing sentiment in all regions deteriorated in February, with the exception of emerging economies, where sentiment recorded a small rebound. Deterioration in […]

Weekly View – “Draghed” down

ECB chief Mario Draghi confirmed a gloomy outlook on the European economy last week in announcing a monetary policy U-turn of his own. Not only were euro area growth and inflation projections cut, but an interest rate hike was ruled out for 2019. The central bank will also launch a new programme of targeted long-term […]

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 […]

Italy: rough waters could grow calmer

The main leading indicators are pointing towards the recession continuing in Q1 2019 in Italy. We expect growth to move marginally back into the black in Q2 2019, with the Italian economy growing by 0.3% in 2019 overall. Even though we have ruled out a snap 2019 election from our central scenario, the chances of […]

Limited upside for USD/JPY but significant downside

The Japanese yen has been weak recently, as volatility in the US stock market has receded. Indeed, the sharp increase in US stock market volatility at the end of last year favoured the yen through short-covering and repatriation flows, whereas the subsequent rebound in global risk appetite has penalised the defensive yen (see chart). This […]

Promoting Family Businesses

2019  Global Family Business Award – The nomination process is open Pictet joined forces with IMD and is now proud to sponsor the 2019 IMD Global Family Business Award, a prestigious annual prize presented to a company that successfully combines family and business interests, tradition and innovation, while at the same time fully assuming its […]

More fiscal support as expected but no massive stimulus for China

The new economic targets for 2019 and policy announcements are broadly in line with our expectations. They generally reflect Chinese policymakers’ intention to support growth in the face of economic headwinds but to avoid massive stimulus. The target for real GDP growth for 2019 was lowered to a range of between 6.0% and 6.5%, from […]

House View, March 2019

Asset Allocation At current valuations, we remain prudent about global equities’ further potential, waiting for further clarity on economic and corporate growth before moving from our present neutral stance. At the same time, we remain confident that the central banks will continue to support markets. In Europe, fiscal policy is expected to give a marginal […]

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