Macroview

Euro area Flash PMIs: “Growing pains” but no reason to panic

Euro area flash PMI indices fell sharply in March, below consensus expectations for the second month in a row. However, details were still largely consistent with a robust, broad-based economic expansion this year, if only at a slightly slower pace than last year. We forecast euro area GDP to expand by 2.3% in 2018. The […]

March Fed review – Mr. Middle Ground

On 21 March, the Federal Reserve hiked rates by one quarter point, as widely expected, nudging the interest rate on excess reserves (IOER) to 1.75%. Chair Jerome Powell’s press conference and the accompanying material – in particular the forecasts for future rate hikes (the ‘dots’) – revealed a slightly hawkish tone, mostly due to policymakers’ […]

US trade policy update – Eyeing China

After the tariffs on steel and aluminium, the Trump Administration’s attention now seems to be focused on China as the US’s merchandise trade deficit with China rose to a new high of USD 375bn in 2017. The trade hawks close to Trump – Ross, Lighthizer and Navarro – seem to be having an increasing influence […]

US Chart of the week – Statistical issues

Do US statisticians have a problem with seasonal adjustment? The question is likely to arise once again this year as Q1 GDP growth looks set to be on the weak side, despite most other macroeconomic signals – including solid employment growth – flashing green. The Atlanta Fed GDP tracker is now at 1.8%. That would […]

Fed preview: all eyes on the ‘dot plot’

The Federal Reserve meets on 20–21 March and is widely expected to hike rates by a quarter point (moving the interest rate on excess reserves up to 1.75%). This decision is ‘priced in’ at 100%, according to Bloomberg data. The focus will be on signals for further tightening in the rest of the year, especially […]

Latest data point to moderate deceleration in Chinese growth

The first batch of 2018 Chinese data on investment and industrial production came in stronger than expected. However, details of the data suggest that actual growth momentum may not be as strong as the numbers indicate. Property investment rebounded to 9.9% y-o-y in the first two months of 2018 from 7.0% in 2017, while investment […]

Japan: Land-sale scandal comes back to haunt prime minister

A land-sale scandal that first emerged last year involving Japanese Prime Minister Shinzo Abe and his wife is back in the spotlight. Although it is still premature to tell if the scandal will end Abe’s tenure, the probability has risen notably. If more evidence emerges in this scandal, it’s not inconceivable that Abe will be […]

Europe chart of the week – Employment

Euro area employment grew for the 18th consecutive quarter in Q4 2017 (+0.3% q-o-q), and is now 1.5% above its pre-crisis (2008) level. By contrast, hours worked per person employed decreased during the same period, remaining 4% below their pre-crisis level. The two data series have followed divergent trends since the start of the economic […]

Limited upside potential for oil

Strong global growth, a substantial US fiscal stimulus, signs that reflation is taking hold in the US and a relatively weak US dollar should all present a favourable environment for commodities, and for oil in particular, for the rest of this year. However, our analysis suggests that oil is now close to its long-term equilibrium […]

Too early for Switzerland’s central bank to change policy…

At its latest  quarterly monetary policy assessment unveiled today, the Swiss National Bank (SNB) maintained its accommodative monetary policy. The target range for the 3-month Libor was kept between -1.25% and -0.25%, the interest rate on sight deposits with the SNB was maintained at a record low of -0.75%, and the central bank reiterated its […]

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