Macro Pulse

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.

Podcast Episode - 5 May 2023

Podcast Episode - 28 April 2023

Financial market jitters have resumed in recent days in part because of renewed concern about funding pressures in the US banking sector. Forward-looking US economic data have additionally disappointed expectations and continue to flag non-negligible risks of a recession in the period ahead.

Episode - 21 April 2023

Concerns in financial markets about the health of the US and European banking sectors have continued to ebb in recent days leaving more familiar macro factors to re-take centre stage. The focus this week in particular has been on the Q1 US earnings season but some stronger-than-expected GDP data from China and another positive inflation surprise from the UK were also in the limelight. 

Episode - 14 April 2023

The IMF has trimmed its global growth outlook for this year and flagged downside risks from a potential further flare up of financial instability. Lingering concerns about high inflation and tight labour markets were also emphasised, not least because a further monetary policy response might re-ignite financial market tensions. In our charts this week we pick up on these themes. 

Podcast - 6 April 2023

The additional liquidity support that’s been offered by central banks, and the Fed in particular, coupled with heightened expectations of a pivot toward looser monetary policy have allayed concerns about banking sector stress in recent weeks. Many observers, nevertheless, are questioning whether the conditions that ultimately warrant this additional policy support will be positive for growth and profitability in the period ahead. Many of our charts this week weigh in on this debate.

Podcast - 31 March 2023

A more positive mood in financial markets has unfolded so far this week as fears about the health of the world’s banking sector have ebbed. For how long that more positive mood endures is, however, still open to much debate. Most of our charts this week we weigh in on that debate with some fresh insights on the recent dataflow.