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We have consistently and correctly forecast since October that the 60bp increase in the global central bank policy rate in 2018 would, with a lag, contribute to global GDP growth falling below 3% in 2019 and to lower inflation and that as a result “policy rate cuts, which had all but disappeared since Spring 2018, may resurface in the second
Read moreA theme which has gained increasing traction is that the world economy could once again go into recession, with some reports that global growth is already in recessionary territory. At a country-level, a recession is defined as two consecutive quarters of negative quarter-on-quarter seasonally-adjusted (real) GDP growth. By this metrics Italy was in recession in H2 2018 while Germany avoided
Read moreMarket focus is likely to centre on tomorrow’s G20 meeting between US President Trump and his Chinese counterpart Xi Jinping (11:30 local time). The broader context is the direct, negative impact which the ongoing US-China trade war has had on US and global economic growth and its dovish influence on the monetary policy stance and outlook of major central banks,
Read moreRetail sales are broadly defined as the sale of durable and non-durable goods by domestic retail establishments (including on-line) to domestic households and tourists. For most developed and emerging market economies retail sales are an important component of personal consumption and thus of overall GDP and historically growth in the global volume of retail sales has closely correlated with global
Read moreWe touch on three key themes this week, which we will further explore in forthcoming FIRMS reports. Theme 1: Low FX volatility Despite significant event risk, including ongoing China-US trade negotiations and Brexit, and central banks’ dovish shift in recent weeks, volatility in major currency pairs – with the exception of the Turkish Lira, Brazilian Real and Argentine Peso –
Read moreThere is no formal definition of what constitutes a safe haven currency. However, it will normally exhibit a number of related characteristics, including i) high trading volume and liquid financial markets, ii) reserve currency status, iii) a low yield and iv) low volatility. Importantly, a safe haven currency will tend to be inversely correlated to assets with a higher risk
Read moreIn line with our forecasts, the 60bp of central bank rate hikes in 2018 is contributing to the ongoing slowdown in global GDP growth, which we estimate will fall below 3% yoy in Q1 2019 for the first time since Q3 2016. The broad-based moderation in global economic growth, along with the fall in crude oil prices, has pushed global
Read moreThe ongoing trade war between the US and China undoubtedly contributed to the slowdown in Chinese GDP growth to a nine-year low of 6.4% yoy in Q4 and (re)ignited concerns that China is in trouble. However, this slowdown needs to be put in context. For starters, this gradual downturn in Chinese GDP growth is probably a reasonably accurate reflection of
Read moreIn the UK the House of Commons voted against the draft Brexit deal by a crushing majority of 230 – in line with our forecast (Tuesday 11th December: Brexit D-Day, 4 December 2018). With the UK due to exit the EU in only 70 days, the British government is fast running out of time and options and Sterling volatility is
Read moreThis report examines the monthly seasonal patterns of 32 major Nominal Effective Exchange Rates (NEERs) going back to January 2011, using 76,600 daily data points. The NEER provides a more accurate overall picture (than the exchange rate versus the Dollar or other individual currencies) of a country’s currency and trade competitiveness and risks of imported inflation/deflation and is therefore an
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