The Trump Administration last week announced tariffs of 25% on USD 60bn worth of imports from China (out of USD 506bn of total Chinese merchandise imports). The list of products targeted still has to be thrashed out. The official aim is to sanction China for alleged theft of US firms’ intellectual property; the US Trade […]
Switzerland has run a current account surplus since the 1980s. In 2017, it stood at around 9.8% of GDP, CHF66bn. This was CHF4bn higher than in 2016. Economic theory suggests that a large current account surplus is a function of an undervalued currency. Based on this premise, there may be question marks over the SNB’s […]
The transitional deal reached between the UK and the European Union (EU) on 20 March and the strong job market report on 21 March plead for a more positive short-term outlook for sterling than previously thought. We are therefore revising our projections upward for sterling over the next three, six and 12 months versus the […]
Much of recent ECB dovish rhetoric has been building around the (not-so-new) idea that potential growth might be higher than previously thought, implying a larger output gap and lower inflationary pressure, all else equal. The argument is both market-friendly and politically welcome – what we are seeing is the early effects of those painful structural […]
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 […]
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’ […]
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 […]
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 […]
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 […]
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