29 news articles are available

03/01/2019 Cross Asset

Fed "quantitative tightening" is close to its end

Fed communication has moved significantly towards a much more dovish tone in the past two months. The change in communication has been twofold, both on rates (the Fed became "patient" and "flexible" on the rate outlook) and on prospects for the so-called quantitative tightening (no longer any "autopilot" in balance-sheet runoff). In this piece we focus on the second tool of Fed policy, analyzing rationales and targets behind balance sheet normalization, which have been detailed and widely expressed in recent Fed communication released by Chairman Powell, other Fed governors and the minutes of the January FOMC meeting. An earlier end to "quantitative tightening" (QT) has become likelier, working in combination with a more dovish stance on rates.

02/07/2019 Cross Asset

Macro: A year in two stages

2019 begins with a synchronized global slowdown. All recently published data, particularly trade and manufacturing data, show that economic activity is slowing in all countries simultaneously. In China, exports and imports contracted sharply in December, as did most Asian economies. In Europe, growth also seems to be slowing more sharply than expected. Germany - the Eurozone economy most exposed to the manufacturing sector and world trade - seems to be the most affected. Finally, in the US, business investment shows early signs of weakness (deterioration of ISM indexes or confidence of small businesses); and the rise in credit spreads will certainly weigh on investment in 2019. In these conditions, should we fear a fall in global growth? Or is it a temporary slowdown?

01/09/2019 Cross Asset

There Is No Synchronized Global Economic Cycle

A key theme at the start of 2019 is a synchronised global economic slowdown. This is the clear message given by the recent PMI surveys. Global growth seems to be on the wane, while global risks continue to add to the climate of uncertainty. In the developed economies, all eyes are on the US cycle and the fall in its ISM indexes. Meanwhile, in the emerging world, the focus is naturally on China, whose economy continues to show signs of losing steam at the start of this year.