Tag Archive: Macroview

China: 2018 GDP forecast revised up

2018-01-27

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2018-01-27

The Chinese economy ended 2017 on a strong note. In Q4 2017, China’s GDP amounted to Rmb23.4 trillion (about USD3.7 trillion), rising 1.6% over the previous quarter and 6.8% year-over-year (y-o-y) in real terms. Full-year GDP came in at Rmb82.7 trillion (about USD12.9 trillion), growing by 6.9% in real terms and beating the consensus forecast as well as our own estimate (both at 6.8%).

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US chart of the week – Texas rebounds

2018-01-26

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2018-01-26

One of the major rivalries in the US is that between California and Texas, the country’s biggest and second-biggest states respectively in GDP terms. They have different growth drivers (most notably Silicon Valley in California and the energy industry in Texas), and they also have different political landscapes – and local taxation regimes. But which one’s ahead when it comes to employment growth?

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Euro area: Business activity expanding at its fastest pace in nearly 12 years

2018-01-24

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2018-01-24

Eurozone Composite PMI and GDP Growth, 2000 - 2018
The flash composite Purchasing Managers’ index for the euro area increased to 58.6 in January from 58.1 in December, above consensus expectations (57.9). The services sector index rose, offsetting the decline in the manufacturing index . Companies also expressed growing optimism about this year’s outlook, with business expectations up to an eight-month high.

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Upside risks to wages from IG Metall negotiations

2018-01-21

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2018-01-21

Euro area and German Wage Growth, 1999 - 2018
German wage negotiations are in full swing amid growing calls for strikes. This comes at a crucial time for the ECB as strong growth and falling unemployment are expected to feed into higher inflation. IG Metall is by far the most important union to watch, representing almost 4 million German workers and being seen as a benchmark, including in the car industry or the construction sector this year.

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China: FX reserves rise again

2018-01-18

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2018-01-18

According to the Chinese State Administration of Foreign Exchange (SAFE), China’s FX reserves amounted to USD3.14 trillion at end - December 2017, up USD20.7 billion from the previous month. This marks the 11th consecutive monthly increase in Chinese FX reserves since February 2017.

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Switzerland: Inflation at a seven-year high

2018-01-10

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2018-01-10

Swiss Headline and Core Inflation, 2005 - 2018
According to the Swiss Federal Statistical Office (FSO), consumer prices in Switzerland remained broadly stable at 0.8% y-o-y in December, in line with consensus expectations, meaning that Swiss inflation stayed at its highest rate in almost seven years at the end of 2017.

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The BoJ is sticking to monetary easing

2017-12-30

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2017-12-30

YoY Changes in headline and Core CPI in Japan
The BoJ remains the last major central bank still firmly committed to large-scale monetary easing.After its Monetary Policy Meeting of December 21, the Bank of Japan (BoJ) announced its intention to keep its current monetary easing programme intact. The BOJ will continue with its “Quantitative and Qualitative Monetary Easing with Yield Curve Control ”, aiming to achieve and overshoot the core inflation target of 2%.

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Global macro: 10 surprises for 2018

2017-12-29

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2017-12-29

Having laid down our expectations for the World economy in 2018, in this note we describe a number of potential surprises to the outlook. The usual suspects, or ‘known unknowns’, include a larger-than-expected fiscal boost from US tax cuts, (geo-)political risks, economic policy mistakes, inflation surprises, a financial bubble burst, or a Minsky moment in China, to name a few.

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2018 ECB outlook – Mission: possible

2017-12-28

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2017-12-28

ECB Asset Purchase Programmes, March 2015 - December 2017
We expect the ECB to announce a tapering of its asset purchase programme in the summer, but not to overreact to strong economic data. Our first choice as the title for our 2018 ECB outlook was “The courage not to act”, but regular readers will know that we used this hommage to Ben Bernanke earlier this year.

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Chinese demand leads the Swiss watch industry’s recovery

2017-12-28

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2017-12-28

Switzerland Exports, 2005 - 2017
The most important driver of the Swiss watch industry’s recovery has been the revival of the mainland China market. After years of impressive growth, the Swiss watch industry faced difficult conditions in 2015 and 2016, when exports declined by 3.2% and 9.9% respectively in value terms.

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US to overtake Switzerland in WEF competitiveness survey?

2017-12-24

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2017-12-24

Most Problematic Factor for Business in US
The US is about to enact significant corporate tax cuts, and could therefore edge closer to the number 1 spot in the World Economic Forum’s ranking – currently held by Switzerland. The US is about to enact significant corporate tax cuts, that will see the federal statutory corporate tax rate drop to 21%, from 35%, starting in January (see our latest note ‘US tax cuts update – 19 December 2017’).

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US tax bill looks set to pass

2017-12-24

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2017-12-24

The tax bill continues to make its way through Congress at a swift pace, and now looks increasingly likely to be enacted into law this week, after clearing the conference committee hurdle (a compromise between the House and Senate versions). A few hesitating Republican Senators have eventually said they will vote in favour of the bill, which is key as the Republican majority in the Senate is slim at 52-48. It will shrink to 51-49 in January after...

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Increasingly optimistic on Swiss outlook

2017-12-22

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2017-12-22

At its December meeting, the Swiss National Bank (SNB) left its accommodative monetary policy unchanged. More specifically, the SNB maintained the target range for the three-month Libor at between - 1.25% and-0.25% and the interest rate on sight deposits at a record low of - 0.75%. The SNB also reiterated its commitment to intervene in the foreign exchange market if needed, taking into account the “overall currency situation”.

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ECB closer to the 2% inflation target than meets the eye

2017-12-21

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2017-12-21

During an uneventful ECB press conference on Thursday, attention centred on the new staff projections. The headline projections were in line with expectations, albeit slightly higher on GDP growth and lower on inflation. The key word was “confidence” - in a strong expansion leading to a “significant” reduction in economic slack, as well as in the ECB’s capacity to meet its mandate.

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Euro area: The sky is the limit

2017-12-20

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2017-12-20

Momentum in the euro area picked up further at the end of the year. The flash composite purchasing managers’ index (PMI) increased to 58.0 in December, from 57.5 in November, above consensus expectations (57.2). The improvement was once again broad-based across sectors.

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Fed’s enthusiasm on tax cut plans remains limited

2017-12-20

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2017-12-20

The 13 December Fed decision – and Chair Yellen’s last press conference – was much as expected. The Fed hiked rates 25bps, bringing the interest rate on excess reserves to 1.5%. Meanwhile, Fed officials maintained their rate-hiking forecasts for next year: three rate increases, according to the ‘dot plot’.

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Slow wage growth to keep Fed on prudent normalisation track

2017-12-17

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2017-12-17

Wage Growth, 2001 - 2017
The November employment report showed another ‘Goldilocks’ set of conditions for investors: employment growth remained firm, especially in cyclical sectors like manufacturing and construction. At the same time, wage growth stayed soft – which means the Federal Reserve is unlikely to shift its current prudent communication on interest -rate hikes (although it is still very likely to hike 25bps on 13 December).

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ECB preview: close to target…by 2020

2017-12-17

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2017-12-17

ECB Staff Projections, Sep 2017
The ECB’s meeting on 14 December would be a non-event if it were not for two specific points to make clear before the Christmas break – the staff forecasts for inflation, and the not-so-constructive ambiguity on QE horizon. We expect no major surprise from the new staff projections, reflecting the ECB’s cautiously upbeat tone.

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Fed rate unlikely to move much above 2 percent next year

2017-12-16

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2017-12-16

The Fed's "dot plot", 2017 - 2019
The Federal Reserve is probably looking back at 2017 with satisfaction. After on the rate rise expected on 13 December, it will have pushed through the three rate hikes it signalled earlier in the year. For once, it has not under-delivered. Meanwhile, the gradual, ‘passive’ decline in the Fed’s balance sheet has been mostly ignored by markets. In fact, broader financial conditions have eased this year despite the Fed’s monetary tightening....

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A crucial step towards US tax cuts

2017-12-15

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2017-12-15

Impact of Tax Cuts, 2018 - 2027
With the approval of the Senate tax bill in the early hours of Saturday 2 December, a key step has been taken toward tax cuts. The next chapter in the process is to reconcile this version with the House of Representatives’ tax bill, most likely in a ‘conference committee ’ from which a final version will emerge.

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