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Large downward revisions to the Swiss National Bank’s inflation forecasts

The Swiss National Bank (SNB) left its monetary policy unchanged at its quarterly meeting today. The main policy rate was left at a record low (-0.75%) and the central bank reiterated its currency intervention pledge. Importantly, the SNB’s inflation forecasts for 2019 and 2020 were significantly revised down—another argument for the SNB to remain cautious […]

Emerging market currencies: idiosyncratic risks strike back

Despite a dovish shift by the Fed and the temporary truce in the US-Chinese trade dispute, the global environment remains challenging for emerging market (EM) currencies. In fact, our latestEM FX scorecard, which ranks 10 EM currencies according to key criteria such as growth and vulnerability to external shocks, is still unable to identify a […]

Chinese export growth slumps

Chinese exports decelerated significantly in November, rising by 5.4% year-over-year, down from 15.5% the previous month. The slowdown in Chinese exports was likely a result of the deceleration in both global growth and the tapering of front-loading of exports to the US. Looking forward, we expect Chinese exports to decelerate further, especially in early 2019, […]

Exit of central bank head adds to Indian market uncertainties

Urjit R. Patel, the governor of the Reserve Bank of India (RBI), unexpectedly resigned on 10 December, just four days before a crucial board meeting on discuss internal governance issues. His resignation came amid a period of acute tension between the RBI and the Indian government over a range of issues, from banking regulations and […]

French move to increase spending will raise eyebrows in Italy

The French President, Emmanuel Macron, has responded to the “yellow vest” protests with a dose of fiscal easing, mainly by bringing forward already planned measures. The spending package has four main building blocks: a tax exemption to incentivise employers for overtime pay; a tax break on overtime pay; a EUR100 increase in the minimum monthly […]

Weekly View – From trade wars to tech wars

The arrest of Huawei CFO Meng Wanzhou by Canadian officials on a US extradition order brings a new layer of complication to the ongoing US-China trade dispute. Chinese telecoms giant Huawei Technologies has ambitions to be a global leader in the next generation of 5G wireless network technology, which has equipment vendors around the world […]

ECB preview: an end to net asset purchases

At its Governing Council meeting next week, we expect the European Central Bank (ECB) to confirm that its asset purchases will cease at year’s end. However, it is likely to stress that the end of the net asset purchase programme does not represent a tightening of its policy stance. We also think the ECB will […]

US November job numbers paint a strong macro picture

US employment rose by 155,000 in November (+1.7% year on year (y-o-y), decelerating from +237,000 in October. The three-month average dropped as well, but is still a healthy 170,000/month (it was 214,000 up to October 2018). November’s wage growth was unchanged from October’s pace of 3.1% y-o-y. Most cyclical indicators continue to flash green, and […]

Some good news despite likely defeat of Theresa May’s Brexit deal in parliament

Theresa May’s Brexit plan is likely to be defeated in the 11 December (unless postponed) UK parliament vote. The press is currently suggesting a defeat by a margin of around 100 MPs, but if it is higher, then it would seriously handicap the chances of a ‘yes’ in a second vote. A rejection of May’s […]

Yellow vest protests cast cloud over Macron’s reform plans

French protests began on November 17 over hikes in fuel taxes, but have progressively broadened out into an expression of general anger with the French government about the cost of living and high taxes. To calm the situation, the government has dropped the planned fuel tax hike from next year’s budget. Whether or not this […]

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