China: Credit surges in January

China’s credit numbers for January surprised on the upside. The figures show strong credit creation in the first month of the year, especially in corporate bonds and bank bill financing. The contraction in the shadow banking sector has also moderated. This suggests that the PBoC’s monetary easing measures, which started in Q2 2018, are gaining […]

Weekly View – US retail flash crash

Last week we saw disappointing data across the board. In China, spending around the Lunar New Year Holiday grew at its lowest rate since 2011, reflecting the downward pressure burdening the Chinese consumer. Puzzlingly, December retail sales data in the US printed the biggest month-on-month decline since 2009, communicating a sharply contrasting message to the […]

Japan: Q4 GDP disappoints

Japanese GDP rebounded by 0.3% quarter-on-quarter (q-o-q) in Q4 (1.4% annualised) after contracting by 0.7% q-o-q in Q3 (-2.6% annualised) due to a series of natural disasters over the summer. In year-over-year (y-o-y) terms, output remained virtually unchanged. Domestic demand was the main driving force for the rebound in Q4, while external demand continued to […]

Euro area : What if car tariffs lie ahead ?

Among the key risks for our euro area outlook, the threat of US auto tariffs is of major importance. The US Commerce Department’s investigation on national security threats posed by auto imports is due to be concluded on 17 February. Given the complexity of the global auto supply chain, it is very complicated to isolate […]

Still moderate US inflation

CPI inflation in January moderated to 1.6% y-o-y, from 1.9% in December (and versus 2.4% on average over the past twelve months). The biggest driver of this moderation was the sharp drop in global oil prices; given recent oil movements, we estimate that headline inflation could slide towards 1% y-o-y in coming months. Excluding energy […]

Reserve Bank of Australia’s upbeat stance turns upside down

On 6 February, Philip Lowe, governor of the Reserve Bank of Australia (RBA), sent clear dovish signals, indicating that a rate cut was now as probable as a rate hike. This led to a significant decline in the Australian dollar. This change in the RBA’s stance highlights increasing concerns around the Australian economic outlook. This […]


January’s deterioration in sentiment was widespread, with the notable exception of the US. However, it is possible that January pessimism was largely caused by December’s poor financial markets. If this is indeed the case, it is likely that we will see a bounce in sentiment in the months ahead, following January’s rebound in markets. The latest global activity hard […]

Weekly View – May awaits her Valentine

Last week’s State of the Union speech revealed little news, but President Trump’s conciliatory tone toward bipartisan deal making was apparent, particularly around infrastructure spending and drug prices. In contrast, he remained firm in his stance on China, although with an economic (i.e. trade), rather than geopolitical emphasis. While there is some uncertainty on the […]

Taking account of regime shifts

Predicting the returns for different asset classes is the Holy Grail of asset allocation. The problem is that risk premiums and returns are instable over time. According to our analysis, over the long term (our data stretches back 115 years) there is a 90 percent probability of achieving an annual average return of 8 percent […]


Since our December note on the 2019 outlook for US Treasuries, the environment for US bonds has shifted dramatically. The 10-year US Treasury yield reached a low of 2.56% on 3 January, the day before Jay Powell, chairman of the US Federal Reserve (Fed), made a U-turn from a hawkish to a dovish stance. Taking […]

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