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Preliminary surveys, published by Markit yesterday and today, point to a further pick-up in economic growth in the world’s largest advanced economies in November. … Flash PMIs …
24th November 2017
It is often claimed that the yield curve is a good leading indicator of economic growth, with inversions signalling impending recessions. But its track record suggests that it shouldn’t be relied upon too heavily. … Is the yield curve a crystal ball for …
22nd November 2017
Ten years after the beginnings of the global financial crisis, the risks of something similar occurring again in the near future appear to be fairly low. The amount of risky lending has been reduced, and asset prices are not generally as over-valued as …
21st November 2017
Although their finances will come under some pressure as interest rates rise, households in most advanced economies should be able to cope. Debt burdens are low by past standards and, provided that policy rates don’t rise much further than we expect, debt …
17th November 2017
Fears that Donald Trump’s election sounded the death knell for globalisation have so far proven wide of the mark. Admittedly, there are still some threats to the outlook, and there is little chance of a further wave of liberalisation. But the recovery in …
16th November 2017
In our view, the tightening of global monetary policy in the coming years need not be all that substantial. This is largely because equilibrium interest rates have fallen a long way in the past few decades, which in turn means that central banks will not …
So far, Brexit has not had the huge adverse effects on the UK which many anticipated, and it has not caused any political upsets in the rest of Europe. It looks like there will be no major changes in the rules governing the UK’s economic relationship with …
15th November 2017
We think the average inflation rate in advanced economies will remain lower than it was in the pre-crisis period for the foreseeable future, for several reasons. In some economies, there is more spare capacity around than meets the eye; in others …
13th November 2017
Although debt-to-GDP ratios in advanced economies remain high by historical standards, they are at least on sustainable trajectories. Accordingly, fiscal austerity and household deleveraging appear to be at an end and will no longer be a drag on global …
10th November 2017
We continue to think that the latest leg-up in oil prices will be reversed. If not, there would be some upward pressure on global inflation, though little effect on demand, in the coming year or two. … Four charts on the latest oil price …
9th November 2017
If “normal” means the under-regulated and over-leveraged state that they were in before the crisis, then that is the last thing we need the world’s banks to return to. Thankfully, however, that does not seem to be happening. Rather, the banks are …
8th November 2017
We estimate that the world economy expanded at a healthy pace of around 3½% annualised in Q3, as the US, euro-zone and UK all grew at a decent pace. Employment has been rising steadily, with jobs growth in the US rebounding in October as the …
7th November 2017
The seeds of the financial crisis were sown in the interaction of four key factors, linked by one critical underlying problem. This was an intellectual failure across financial institutions, policymakers and regulators, who believed that the markets knew …
3rd November 2017
The latest batch of manufacturing surveys suggests that advanced economies continued to do very well in October. As a result, the global manufacturing PMI rose to its highest level since early 2011, and is still consistent on past form with world GDP …
2nd November 2017
Credit growth has continued to pick up gradually in the euro-zone and Japan, and more strongly in the UK. In the US, the slowdown in growth in lending to the private sector has eased recently. … Bank lending still rising …
Pessimism about the potential for future productivity growth and hence increases in living standards, based on recent poor productivity performance, is not well-founded. It provides no good reason to believe that the world is now incapable of technical …
1st November 2017
The world economy looks to have maintained momentum in Q3. We expect another strong quarter to round off the year, and then for global growth to slow only modestly throughout 2018. … Global economy to remain in good …
31st October 2017
We think that financial markets are right to take a relaxed view of the constitutional crisis in Catalonia. The economic fallout for Spain itself should be small, and the risks to the euro-zone are even smaller. … Catalonia impasse is not a new euro-zone …
30th October 2017
Taking account of the ECB’s decision yesterday and of recent changes to our forecasts for Japan, we still think that the scale of central bank asset purchases under QE programmes in advanced economies will slow steadily. But it will be a couple of years …
27th October 2017
The Bank of England is set to hike its policy rate for the first time in a decade at its meeting next week, and the US Fed is on course to raise rates again in December, while continuing to unwind QE slowly. Meanwhile, the ECB has announced its plans to …
The latest CPB data suggest that world trade volumes rebounded in August. Taking a range of indicators into account, the big picture is that the global trade recovery is still underway. … World trade strengthens while NAFTA talks …
24th October 2017
Preliminary PMIs, published by Markit today, suggest that manufacturing growth in advanced economies started Q4 on a strong note. However, they also indicate that price pressures are still subdued. … Flash PMIs …
The steady economic expansion in advanced economies is set to continue for the next year or two, led by rising household consumption and business investment. Although most economies are approaching full employment, inflation will probably remain subdued. …
19th October 2017
Fiscal policy in advanced economies is likely to be slightly accommodative next year, providing a benign backdrop for the world as monetary support is withdrawn. But any direct benefits will be modest. … What are the prospects for fiscal …
17th October 2017
Interest rate hikes are commonly thought to cause recessions. However, the track record of G7 tightening cycles shows that this has usually not been the case. Central banks in the US and Canada are in the midst of policy tightening cycles, and the …
12th October 2017
We expect global growth to slow only modestly as the era of easy money starts drawing to a close. The monetary tightening is set to be gradual, limited and staggered, with some countries only starting to tighten as others are finishing. And the …
11th October 2017
The tone of the IMF’s latest World Economic Outlook, published today, was upbeat and in line with our view that the outlook for the global economy is reasonably bright. But the Fund’s projections still look too pessimistic for the UK, and too optimistic …
10th October 2017
There is no sign that the synchronised upturn in the world economy is running out of steam. The two hurricanes which hit the US in the past couple of months should have only a short-lived impact on the economy while the latest business surveys suggest …
4th October 2017
The latest PMIs, published by Markit today, suggest that global manufacturing growth remained strong in September, adding to evidence that the world economy ended the third quarter on a strong note. … Global Manufacturing PMI …
2nd October 2017
Although the Fed is starting to shrink its balance sheet and the ECB is likely to taper its asset purchases next year, the monetary base in the world as a whole should continue expanding at least until 2019. … Global QE to remain positive for a while …
The US Fed’s decision to begin scaling back its balance sheet nearly eight years after it started QE is a major milestone, but global financial conditions should remain highly accommodative for a long time yet. They are probably more influenced by total …
27th September 2017
The latest rise in oil prices reflects concerns about Kurdish supply and hopes for another extension of OPEC’s output cuts, neither of which may have a lasting influence on prices. But the oil market has become better balanced over the past year, …
26th September 2017
The latest CPB data suggest that the recovery in world trade may have lost momentum. However, these data are at odds with a range of other, more upbeat indicators of global trade. And forward-looking business surveys point to growth in world trade volumes …
25th September 2017
Business surveys published today for the euro-zone and the US suggest that growth in advanced economies was quite strong in September and that price pressures may have picked up a bit. … Flash PMIs …
22nd September 2017
The Fed’s reversal of QE is another sign that the world is inching away from ultra-loose monetary policy. But it is planning to proceed slowly and avoid surprises, and no other central bank is likely to start reversing QE for at least two years. As such, …
19th September 2017
Although we expect the Fed to raise its key policy rate more rapidly than financial markets anticipate next year, our forecast is for it to peak at only 2.25-2.50%, in 2019. In the euro-zone and Japan, where inflation is likely to stay below central bank …
15th September 2017
Although economic activity has gathered pace this year, and many advanced economies are approaching full employment, there is no evidence of a pick-up in wage inflation. Average earnings growth has remained exceptionally sluggish even in countries such as …
13th September 2017
The recent escalation of tensions between the US and North Korea has caused the Vix “fear gauge” to reach its highest level this year, but it remains a long way below the levels it reached during many previous shocks. Unless the tensions escalate …
6th September 2017
The escalation of tensions between North Korea and the US has once again raised the issues of how big the threat is and where the risks lie. In this Update we answer six key questions. … Six key questions and answers about North …
4th September 2017
Global manufacturing continued to expand strongly in August, according to the latest PMIs, adding to evidence that global growth held up well in Q3. … Global Manufacturing PMI …
1st September 2017
The aggregate savings rate in advanced economies has fallen sharply over the past two years, but household finances are still in much better shape than they were before the financial crisis. Claims that consumers are sowing the seeds of the next crisis …
31st August 2017
The US Fed is still on track to start shrinking its balance sheet in the coming month or two, and we think it will raise rates again in December. Meanwhile, the ECB will probably announce in October that it will wind down its asset purchases during 2018, …
30th August 2017
The latest esimates of world trade volumes reinforce the impression that global trade has coninued to expand rapidly in recent months. What’s more, the most timely indicators of freight traffic and the latest business surveys also paint an upbeat picture. …
25th August 2017
Preliminary PMIs, which were published by Markit today, point to continued strong growth in the world’s largest advanced economies in August. … Flash PMIs …
23rd August 2017
Consumer confidence in advanced economies has reached its second highest level since 2001. This suggests that consumption growth will hold up well despite subdued real income growth. … Consumer confidence still …
In recent years, policy rates in advanced economies have been set much lower than the levels implied by John Taylor’s original rule, which he formulated in the early 1990s. But once we account for the fall in equilibrium interest rates globally since …
18th August 2017
Although the minutes of the Fed’s and ECB’s latest policy meetings are consistent with our view that their unconventional policy support will be scaled back in Q4 and early next year, respectively, conditions for raising credit finance are likely to stay …
17th August 2017
Although data released today showed that core CPI inflation remained weak in the US in July, we still think that it will pick up substantially next year. Outside the US, however, it will probably rise only gradually. In advanced economies as a whole, we …
11th August 2017
Monetary conditions remain highly supportive of economic activity, and should continue to be so in the years ahead. While we expect the Fed to begin winding down its balance sheet in Q4 and the ECB to taper its asset purchases next year, the era of global …
10th August 2017
Business surveys suggest that, after picking up in the second quarter, the world economy started Q3 on a strong footing. The upturn in Q2 was concentrated in advanced economies and was led by household spending, particularly in the US. Employment has been …
3rd August 2017
