Macroview

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 […]

US inflation worries prove unfounded

After a solid reading of 0.35% m-o-m in January – which scared some market participants – core consumer price inflation (CPI) proved tamer in February and again in March, posting a more moderate 0.18% m-o-m gain in both months. (That is not too far from the average since 2010 of 0.15% m-o-m). Due to base […]

House View, April 2018

Asset Allocation While macroeconomic and corporate fundamentals still favour risk assets, challenges have been steadily increasing and a lot of good news is already priced into valuations. We sold part of our equity overweight during the early March rally. Even though we have become more prudent about equities’ short-term prospects, we expect to be able […]

US-China trade tensions could last a while

Following on from President Trump’s announcement of a 25% tariff on USD50bn of unspecified imports from China, the US Trade Representative (USTR) last week detailed the list of China-made goods that will be targeted. China reacted swiftly by detailing its own list of counter-tariffs on USD50bn worth of imports from the US. Trump then escalated […]

Federal Reserve’s tightening still on track

Among the many questions posed by the recent more aggressive trade rhetoric from the Trump Administration is whether it will ‘scare’ Federal Reserve officials, and therefore interrupt the current US tightening cycle. But recent comments from Fed policymakers, including from Chair Jerome Powell, suggest that officials remain cool-headed about recent Trump rhetoric. Powell has insisted […]

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