The US labour market continues on a familiar pattern: employment momentum remains robust, but wage growth is still disturbingly lacklustre. In April, 164,000 payrolls were added and the three-month average was a solid 208,000/month. The unemployment rate dropped to 3.9%, the lowest since December 2000 (although this was partly due to a drop in the […]
Next week’s detailed breakdown of ECB QE monthly data will reveal a marked slowdown in the pace of corporate bond purchases in April (Corporate Sector Purchase Programme, or CSPP). Indeed, weekly holdings data have been consistent with gross purchases of around EUR3bn in April, down from EUR5.8bn on average in Q1. There are several possible […]
Asset Allocation In spite of a certain loss of momentum in positive surprises, a strong Q1 earnings season continues to justify our bullish stance on equities in most regions. We reiterate our negative view on core government bonds and remain short duration. Volatility is still higher than last year, and has increased noticeably in the […]
The Federal Reserve meeting of 1-2 May 2018 brought no surprises. As the Fed kept rates unchanged (i.e., the Fed’s interest rate on excess reserves still at 1.75%), as widely expected, the focus was on the post-meeting statement for possible signals on future rate hikes. There was no press conference. The question was how the […]
The European Central Bank (ECB) does not seem overly concerned about the soft patch in the economy in Q1 and appears willing to collect more data before they start discussing the timing and modalities of the next policy steps. We expect the ECB to hint at an imminent end to asset purchases at its June […]
US construction is doing broadly fine, echoing the solidity of the US business cycle. On a y-o-y basis, construction was up 3.9% in March and 5.5% y-o-y in Q1 2018. Construction outperformed nominal GDP, which was up 4.8% y-o-y in Q1. The main engine is the residential market, up 7.8% y-o-y in Q1. Nonresidential construction […]
Euro area real GDP expanded by 0.4% q-o-q in Q1, or 1.7% in annualised terms, according to Eurostat’s flash estimate. This comes after an upwardly revised figure of 0.7% q-o-q in Q4 2017. Although this first estimate could be subject to statistical revisions, it confirms that the euro area economy lost some momentum in Q1. […]
The 10-year Treasury yield broke through the key 3% threshold last week– as we had expected it would at some stage in our central scenario. We are sticking to this central scenario, which sees the 10-year Treasury yield ending the year at around 3%, but with some spikes above this level in Q2 and Q3 […]
So far this year equity returns have been fairly disappointing and market volatility has significant increased compared with 2017. However, disappointment has been driven neither by poor economic conditions nor by a worsening of company fundamentals, and mergers and acquisitions (M&A) remain supportive. The acceleration of M&A in some regions illustrates that investor sentiment is […]
At its latest monetary policy meeting on April 27, the Bank of Japan (BoJ) decided to keep its current monetary easing programme intact. Under its yield curve control (YCC) policy, the BoJ applies a negative interest rate of -0.1% to the policy-rate balances in the current accounts held by financial institutions at the Bank, and […]
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