by Kim | Jun 4, 2018
Data from last week highlighted slower growth in Q1 across US, Europe, Canada; PMI’s improving in the US but the “soft patch” likely persisting in Europe; CPI’s higher impacted by energy costs.
US – GDP growth remains steady, though lower than recent growth, stronger employment growth than recent average, signs of continued wage growth and inflation remains close to the Fed’s target. PMI’s and regional surveys starting to post improvements after weakness earlier in the year, suggesting further growth. Trade/tariffs: uncertainty impacting sentiment and input prices – regional survey anecdotes, impact already seen in higher input prices, some supply issues emerging.
Europe – CPI growth higher but driven by a continued acceleration in energy prices, manufacturing PMI suggesting soft patch is persisting. Stronger retail growth in Germany, slowing Q1 GDP growth in France.
Canada – GDP growth slowing in Q1, rates on hold, BoC watching for impact on households and the housing market from higher mortgage rates and tighter lending.
Japan and China PMI’s – expansion in overall manufacturing activity remains mostly unchanged, no sign of an acceleration higher.
Several speeches from US Fed Governors during last week were of interest: –
Brainard: yield curve inversion less of a signal than in the past (Fed keeping rates low), curve movements to be interpreted within context of financial conditions. Yet Bullard’s speech earlier in the week highlighted the risk of allowing the yield curve to invert.
Bostic & Brainard: US treasury fiscal spending likely to impact short-medium term outlook for the economy, risks are to the upside for now, possible case for further rate increases. Not clear that fiscal spend and tax reform (the details yet to be written) will move the economy to a different, higher sustained level of output ie improve productivity. Both Bostic & Brainard see likelihood that positive impacts of fiscal spend will fade over the medium term.
For all the detail, download the full review (then hit the ‘back’ button to return to this post):
Weekly Macro Review 28May2018
Looking forward to this week, trade will be a key theme: –
- Trade:
- Further developments regarding the imposition of tariffs and retaliatory measures among NAFTA/European countries
- Outcomes from latest negotiations with China likely to drive sentiment
- G7 summit 8-9 June
- US, Chinese & German international trade data
- US liquidity: a lighter week with treasury bill auctions, but heavier supply next week approx. $39b in new money to be raised next week (amts TBC via Treasury announcements). No scheduled Fed speeches this week but with FOMC on board next week 13 June, expect some Fed speak
- Australia – RBA rates decision and Q1 GDP
- European growth – Q1 GDP (revised), ECB Draghi speech on Tuesday
- UK – Services PMI and Like for like Retail Sales, plus Monetary Policy Committee Member speeches all week
Download the full calendar for this week (then hit the ‘back’ button to return to this post):
Weekly Macro Brief 04June2018
Feedback is welcome. Please send any comments or questions to kim.mofardin@marscapitalpartners.net.
by Kim | May 28, 2018
A summary around our key themes for last week (w/c 21 May):-
- FOMC – Signalling on rates from minutes & speeches
- No additional rate hikes this year (expect two, rather than three more rate increases), Fed outlook and policy stance hasn’t changed
- Most speeches this week reinforced that Fed will tolerate inflation above 2% for a time
- Econ data tracking in line; no reason to think performance above/below expectations
- Key considerations: inflation just reaching 2% now, continued wage growth, some business uncertainty with regard to trade, shape of the yield curve (future growth expectations “sluggish”)
- Neutral rate: somewhere between 2.25-2.75%. Several speeches highlighted moving to that level and then seeing how the economy develops
- US data – PMI, regional survey’s and durable goods (ex-transport) showing continued expansion. A key theme is rising cost price pressures, some optimism about ability to pass higher costs on.
- Europe – German and European PMI’s continued to slow (expanding at a lower rate), ECB remaining accommodative, core inflation still subdued and has not shown an upward trend yet. Brexit and trade uncertainties.
- UK – slower GDP growth, flat retail sales, inflation moderating (positive), BoE concerned about Brexit, remaining accommodative.
- Japan: Tokyo Inflation continues to moderate, in line with slowing inflation and growth
For all the detail – download the full report:
Weekly Macro Review 21May2018
Another big week ahead with global growth and inflation remaining in focus:-
- US growth, employment and inflation
- EU Inflation, employment
- German retail sales and CPI
- Canada – GDP and BoC rates decision
On the central bank (US) liquidity front this week its month end. Note and bond settlements, Fed holdings mature and Fed balance sheet reduction on 31 May 2018.
Full details of the calendar:
Weekly Macro Brief 28May2018
Feedback is welcome – please send any comments or questions to kim.mofardin@marscapitalpartners.net
by Kim | May 23, 2018
We will commence posting two additional notes each week – a weekly macro brief and a weekly macro review. These notes are not designed to be deep-dive analytical pieces, but instead, provide a guide as to major events and round up of economic performance as related to the markets and key themes that we are following.
Our focus overall:
- Central banks; US liquidity, US Fed normalisation and rates signalling
- Macro context; identify whether data are confirming or challenging views on key themes including growth and inflation
- Alignment with current market analysis
Each week we will post:
- The Weekly Macro Brief – providing an overview of upcoming key events for the week including US Treasury issuance versus US Fed normalization, central bank speeches and key economic events. Posted at the start of the week.
- The Weekly Macro Review – a round-up of the important events, how they relate to key themes around growth, inflation and liquidity (with links to original sources). Posted at the start of the week.
I have posted the Weekly Macro Review for last week w/c 14 May 2018 and the Weekly Macro Brief for w/c 21 May 2018 (filled out with Monday and Tuesday data). The weekly reviews going forward will have an executive summary of how the data relates to key themes and dovetails into our market analysis.
Weekly Macro Review 14May2018
Weekly Macro Brief 21May2018
Comments and feedback are welcome.
kim.mofardin@marscapitalpartners.net
