Macro Pulse

Signs of normalisation

This week’s weaker-than-expected US inflation data coupled with tentative evidence suggesting that labour market activity may be cooling have driven soft landing scenarios into the ascendancy once again. With this in mind our charts this week home in on the following themes:
·       The decoupling of the global growth consensus
·       The decoupling of the inflation consensus
·       The importance of energy prices
·       The slowdown in the UK labour market
·       Still-low estimates of r-star in major economies
·       Still-high estimates of output gaps in major economies

Are we nearly there yet?

Financial markets have been rattled both by more hawkish communications from central banks and some much firmer-than-expected US labour market data in recent days. The consensus that monetary policy tightening cycles were close to completion and that soft landing scenarios were plausible is now being more actively challenged. In our charts this week we drill into the following issues:
·       The central bank policy consensus
·       The messaging from the US yield curve
·       Negative global inflation surprises
·       Receding capacity tensions in US manufacturing
·       Ebbing near-term inflation expectations in the euro area
·       The inflation messages from Japan’s Tankan survey

Charts of the Week: Growth and policy decoupling

Financial markets have been a little more unsettled in recent days as recession fears have resurfaced again in several major economies. Those fears have been amplified by remarks from central bankers suggesting that further monetary policy restriction is likely. Still, most gauges of financial market stress have not signalled any significant instability in recent weeks. In our charts this week we home in on:
·       The divergence between US and euro area data surprises
·       Ebbing rates of core CPI inflation in Canada
·       Recent UK financial market trends
·       Some evidence of slower labour market activity
·       Weaker inflation expectations in the euro area
·       Household savings trends in the US

Charts of the Week: The potency of policy

A recurring theme in the dataflow over the past week concerns the potency of monetary policy. Another positive CPI surprise from the UK and a 50bps hike from the BoE have, in particular, offered a stark reminder that central banks are struggling to calibrate monetary policy at an appropriate level. Against that backdrop our charts this week home in on the following themes:
·         The re-renewed vigour in the US housing market
·         Restraints on UK household purchasing power
·         UK food and energy price inflation
·         The contraction in narrow money growth in the euro area
·         The liquidity slowdown in China
·         The weakness of South Korea’s export growth

Unveiling this Week’s Charts: Pausing, peaking or pursuing?

Central banks have stolen the limelight over the past few days but with policy shifts that reveal stark differences - and perhaps greater disagreement - about the outlook for their respective economies. Receding headline inflation pressures, in the meantime, has been a key theme in the dataflow. But stubborn core inflation and still-tight labour markets are still clearly leaving central banks nervous about the calibration of monetary policy. We will be picking up on these issues in a forthcoming webinar about inflation next week.
In the meantime our charts this week focus on:
The stance of the Fed’s monetary policy
Financial markets and interest rates
Global inflation expectations
US inflation drivers
The rigidities in the UK labour market
China’s disappointing reopening phase

Fading supply chain pressures, inventory imbalances and ebbing PPI inflation

Financial market sentiment has continued to improve in recent days in part due to the removal of uncertainty surrounding the US debt ceiling. However, as some of our exhibits this week suggest, the world economy is not yet out of danger. Our charts specifically home in on the following factors:
Fading global supply chain pressures
Weaker inflation in the euro area
The slowdown in China’s trade
The fragility of investors’ growth expectations
US inventory imbalances
Asia’s transition to a Green economy
Read the full commentary and see the charts here: https://haverproducts.com/charts-of-the-week-2023/

Global vulnerabilities, inflation, credit and labour markets

The world economy’s underlying vulnerabilities have been in sharp focus over the past few weeks, but more deep-seated wounds with longer-lasting scars have been avoided, at least for now. Still, the avoidance for now of bigger wounds does not mean that these vulnerabilities have been erased.
In our charts this week we focus on:
Negative global growth surprises
The recent strength of the US dollar
Slowing euro area inflation
Weaker bank credit growth in the US and Europe
Mixed messages from the US labour market
Increased youth unemployment in China
 
 

Latest Charts | Market Jitters, a Tighter Fed, and Inflation Angst

Lingering concerns about US debt ceiling negotiations have left financial markets on the back foot over the past few days. But incoming economic data this week have not helped. With that in mind our charts this week offer some perspectives on the following factors:
 
·         Market expectations for Fed policy
·         Global growth surprises and copper prices
·         Economic growth in Asia’s industrialised economies
·         Semiconductor inventories
·         Inflation and energy prices
·         Core inflation (and energy prices)

Episode - 19 May 2023

Financial markets were a little unsettled earlier this week but heightened optimism about the willingness of US politicians to raise the US debt ceiling has calmed some fears. Incoming economic data, however, have taken a turn for the worse and there is arguably now mounting evidence to suggest that tighter monetary policy is beginning to exact a heavier toll. Against this backdrop, our charts this week home in on:
·         The US yield curve
·         Private sector deleveraging
·         China’s disappointing reopening phase
·         Japan’s economy in Q1
·         The UK labour market
·         Inflation, profits and sales

Podcast Episode - 12 May 2023

This week’s key release, namely April’s US CPI data, more or less met market expectations while on the policy front the Bank of England matched forecasts too in hiking the Bank rate by 25bps. Otherwise the stability of the US banking sector and debt ceiling politics were a couple of themes for investors to additionally focus on.