In recent analyses of major developed economies, mixed signals emerge from leading indicators, presenting an unclear future trajectory. The Conference Board’s Leading Index, for instance, provides some evidence supporting the possibility of an impending recession. Nevertheless, there are indicators like
Market Dynamics & Beijing's Policy Shifts UBS ETF Capital Markets' weekly report, titled "Weekly Flow Update," from August 21st to 25th unveils a dynamic market landscape amidst a typical summer slowdown. Key highlights include policy declarations from Beijing, a global
In a bustling week for global markets, events culminated in bolstered investor sentiment despite notable interest rate hikes by the Federal Reserve and the European Central Bank. The underpinning factor was a dovish disposition by policymakers coupled with encouraging economic
Decoding Policy Shifts In the intricate dance of global economics, Franklin Templeton Investment Solutions' report, "Policy is key", spotlights the evolving monetary strategies of major central banks. Amid the dance of financial markets, the focus is now on identifying the
Climate change risks and their impact on monetary policy are at the forefront of this week's ECB Forum on Central Banking in Sintra. An awarded academic paper will explore how transitioning to a net-zero emissions economy can influence the transmission
The main theme for the second half of 2023, as per CIO convictions, involves a narrow and uncertain growth path, an inflation slowdown, and monetary tightening close to its peak. Growth will decelerate, with a mild US recession, anemic growth
The macroeconomic outlook reveals a blend of opportunities and challenges as viewed from Europe. Despite tightening financial conditions expected to affect economic growth, data have been surprisingly positive. Central banks globally are nearing peak tightening, with the Federal Reserve possibly
As Europe grapples with increasing oil prices and the subsequent impacts on energy supply, the corporate landscape sees potential shifts in profit margins. Both the European Central Bank (ECB) and the Federal Reserve project peaking rates by September, followed by
In "Sector Vulnerability to Rising Financing Costs", the examination of how rising financing costs affect different sectors and regions worldwide is outlined. The text highlights the increasing debt-to-EBITDA ratio among US and European firms, and their potential vulnerability to liquidity
The theme of the text pertains to current asset allocation decisions amidst a less optimistic economic outlook. The author maintains a preference for fixed income over equities, largely due to anticipated headwinds for corporate earnings and margins from higher interest
The main theme of the text is the greening of the European Central Bank's (ECB) balance sheet as it integrates climate considerations into its monetary policy. Since October, the ECB has been redirecting corporate bond purchases towards issuers with better
The main theme of the text revolves around global trade recession, electric car pricing, German household savings, and German foreign direct investment (FDI) in Africa. The focus then shifts to policy rate decisions in the US and Eurozone amid inflation
AXA Investment Managers' report, "The Pitfalls of the Inflation Blame Game," critically examines the European Central Bank's (ECB) emphasis on profit margins as the main factor driving persistent inflation. The report acknowledges the acceleration of core inflation in the Euro
Last week brought good news on US inflation but the declines were even more dramatic in Europe. However, core inflation in the Eurozone has yet to peak. We believe it will follow headline inflation lower but the ECB may want
Market reactions to the ongoing banking turmoil resulted in a significant downward revision of expectations for the policy rate of both the Federal Reserve and the European Central Bank (ECB). The market expressed its skepticism regarding the central banks' ability
As it has been clearly communicated by ECB policymakers in recent weeks, the central bank will hike by 50bp in its March meeting, taking its main refinancing rate to 3.5%. Moreover, President Lagarde will likely signal another large hike in
The US authorities took out the “big guns” and acted decisively before the market open to contain the spill over effect from the demise of SVB (now accompanied by Signature Bank) using a two-pronged approach. First, they will “make good”
The February inflation data vindicates the European Central Bank (ECB) hawks. We remain however concerned with the “financial channel”: the January batch for loans confirms the credit impulse in deeply negative. We look at Sweden and the UK as “canaries
What to watch: Nigeria beyond the elections, Eurozone mortgages and China’s reopening. Market movers Nigeria – Beyond the election transition. As Nigeria heads to the polls on 25 February, economic headwinds are intensifying. The next government will need to address
Global tactical asset allocation views brief After a weak 2022, the grass seemed a lot greener at the start of 2023, with equity and bond markets roaring back strongly. The optimism was fueled by a continuation of weaker headline inflation
While the Eurozone’s headline inflation has been slowing for two consecutive months, largely driven by negative energy base-effects, the region’s core inflation has yet to show any convincing signs of turning back down. Coming in at 5.2% year-over-year in December,
A central narrative of 2022 was that central banks, including the European Central bank (ECB), were “behind the curve”. As a result, eurozone inflation rose to levels not seen for decades, eroding living …
Market Perspective Volatility likely to remain elevated in the new year as central bank policy expectations diverge amid evidence of slowing growth and moderating inflation. While slowing the pace of tightening, the US Federal Reserve reinforced its commitment to taming
Faced with the risk of persistently high inflation, both the European Central Bank (ECB) and the Bank of England increased their main policy rates substantially in 2022. Policymakers have signalled that more increases are coming. To calibrate the scale and
TLTRO repayments and redemptions will drive incoming ECB passive QT over the next few quarters. So far, banks have repaid a small amount of liquidity, while the ECB’s recent decision on remuneration of excess reserves has helped keep current excess
Extracting a common thread from last week’s abundant information flows was impossible. Perhaps the critical item will be the weakness of the US economy revealed by detailed GDP data. Last week was rich in information. From UK and Chinese politics,
Q4 2022 Investment Outlook: The global economy is facing a confluence of shocks, most recently the severe reaction in UK assets and FX to the new fiscal package (roughly 10% of GDP, unfunded). Market confidence has continued to slide on
Monthly investment outlook august 2022 Just as markets had to reprice a new interest rate regime in early-2022 amidst fading hopes for a transitory inflationary backdrop, they are now similarly beginning to recognise that the prospects of an economic soft
For all of 2022, we have focused on tighter monetary policy, discussing the dilemma faced by central banks (in ‘Czech Mate’) and their subsequent decision to prioritize the war on inflation (in ‘The Inflation Game’). As we peer into 2023,
It’s work in progress for central banks. But the meaning of this phrase differs depending on the bank in question. For the Fed it means taking policy rates another big step towards restrictive territory. The ECB seems to be edging
ECB forced to tighten more agressively
BIS Working Papers No 1034 We incorporate monetary policy into a model of stochastic debt sustainability analysis and evaluate the impact of unconventional policies on sovereign debt dynamics. The model optimizes debt financing to trade off financing cost with refinancing
Market Perspective Inflation concerns remain at the forefront for central banks and investors as global growth continues to trend lower amid supply disruptions, geopolitical challenges and reduction of liquidity, setting the stage for a challenging macro backdrop. The US Federal
So far in 2022, the European economy has held up remarkably well despite investor worries about a war-induced recession. But as the European Central Bank (ECB) prepares to hike interest rates at its 21 July meeting, the economy faces substantial
Following yesterday’s stronger than anticipated Eurozone inflation print, coupled with recent comments from various ECB members including President Lagarde, Vice-President de Guindos and Chief Economist Lane, the European Central Bank are expected to increase interest rates in July, the first
Dear Mr Draghi, After a busy couple of months leading a fractious Italian government through various crises, you must be looking forward to a well-deserved summer holiday. Before you and your team leave for the beach, the ECB is preparing
April saw the coordinated bond and equity sell-off continue as the ECB joined the increasingly hawkish tone out of the Fed and added to heightening growth concerns in the month. Indeed, this shifting in the growth-inflation balance is …
April meeting: No further acceleration of stimulus withdrawal was hinted at by the ECB in April. It confirmed both the previous guidance on QE (likely to end in Q3) and the policy sequence, with interest rates to rise at “some
Inflation and Russia’s invasion of Ukraine dominate media headlines and the economic and financial environment. US inflation has accelerated further to an average of nearly 7% year-over-year (Y/Y) in the six months through February, from close to 6% over the
The uncertainty caused by the war in Ukraine, the sharp increase in commodity prices, and the deterioration of supply chain issues are dampening the economic outlook. At the same time, the inflation risks have increased drastically. The Fed has promised
Ben Bernanke eloquently expressed the central banks dilemma when dealing with an exogenous price shock: “monetary policy cannot offset the recessionary or inflationary effects of increased oil prices at the same time”. It must choose. He also proposed a qualitative
Major political economy shifts often coincide with wars or preparation of wars. They do not simply affect how resources are affected to defend against external threats. They also shape priorities on civil spending to maximize internal social cohesion. Building a
In the light of rising inflation numbers, central banks have made sharp hawkish shifts. The Fed is now expected to hike rates five times this year and to start rolling off its balance sheet. Even the ECB is expected to
The geopolitical escalation at month’s end marks a further rise in volatility, even as the Fed and the ECB displayed hawkish overtures earlier. We suggest a more cautious stance in credit amid rising liquidity risks and a less appealing risk/return
In the light of rising inflation numbers, central banks have made sharp hawkish shifts. The Fed is now expected to hike rates five times this year and to start rolling off its balance sheet. Even the ECB is expected to
Stubbornly high inflation numbers have sparked nervousness among central banks, which are rapidly reverting to hawkish policies. The Fed is now expected to raise rates five times this year and to start rolling off its balance sheet. The ECB …
Bundesbank President Weidmann today surprisingly announced his resignation at the end of 2021 and gave personal reasons for this decision. Jens Weidmann was considered a proven monetary-policy hawk within the Governing Council of the European Central Bank (ECB). During his
Core government bond markets ended the week with a better tone, even as the European Central Bank announced its intentions to modestly reduce asset purchases, and as the ECB increased forecasts for economic growth and for inflation. The ECB notched
Government bond yields generally moved higher last week; the spectre of a withdrawal of ultraeasy policy conditions remains front and centre of attention. Indeed, we will hear more on this subject perhaps this week from Europe when the European Central
Forecast update: a touch of stagflation We still expect a robust recovery in the world economy, but the outlook has moved in a stagflationary direction as growth momentum fades and price pressures rise. Our forecast for global GDP growth is
