Soybean tariffs causing distortion in export growth

The rush by US exporters to beat the imposition of retaliatory tariffs on soybeans by China will provide an artificial boost to second-quarter GDP growth, but will become a potentially significant drag in the third quarter.
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US Data Response

ISM Manufacturing Index (Jul.)

The further small decline in the ISM manufacturing index in July probably has more to do with the continued drag from supply constraints than waning demand. The details did at least suggest that supplier delivery times and the accompanying upward pressure on prices may have peaked. But we suspect it will be a long time before supply constraints ease meaningfully.

2 August 2021

US Economics Weekly

Recovery to slow from here

The slightly disappointing second-quarter GDP data released this week and another dovish press conference from Chair Jerome Powell strengthen our belief that the Fed is unlikely to begin tapering its asset purchases until early next year.

30 July 2021

US Employment Report Preview

Payroll growth to remain elevated

With labour supply continuing to lag the recovery in demand, we estimate that growth in non-farm payrolls slowed to 650,000 in July.

 

29 July 2021

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Commodities Weekly Wrap

Middle East tensions back in the spotlight

Having surged this week, the price of oil could rise further in the near term if tensions between Iran and the US continue to escalate. At the same time, the price of gold is benefitting from an increase in safe-haven demand and a weaker US dollar. The prices of most industrial commodities also rose this week as both the Fed and the ECB signalled looser monetary policy and President Trump announced that he would meet with President Xi on the sidelines of the G20 meeting. Markets will be closely watching events in the Gulf over the next few days. Elsewhere, the G20 summit in Osaka, Japan, gets under way on Friday and all eyes will be on the Trump-Xi meeting. Even if some sort of trade agreement is reached between the two leaders, we do not think it will last. A deal which would be acceptable to both sides appears increasingly remote. We suspect that by early next year, nearly all of China’s exports to the US will be subject to tariffs. Finally, the biannual OPEC and OPEC+ meetings that had been scheduled for next week have been postponed until 1st-2nd July, reportedly because Russia was keen that the meetings be held after the G20.

21 June 2019

Africa Economics Weekly

Easing cycle gains momentum, no news from SONA

Inflation figures released in South Africa and Nigeria this week supported our view that policymakers in both countries will loosen monetary policy later this year. Rates elsewhere are already falling; the Bank of Mozambique cut by 25bp this week. President Cyril Ramaphosa’s State of the Nation Address was disappointingly light on substance, suggesting that divisions within the ANC are hobbling policymaking.

21 June 2019
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