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25 March 2019 The Fundamentals are at Odds with the Curve, no Recession Near (Publication Centre)

The commentariat was very excited Friday by the inversion of the curve, with three-year yields dipping to 2.24% while three-month bills yield 2.45%.

12 December 2018 Is Britain now at the Steep Part of the Phillips Curve? (Publication Centre)

The sudden jump in the headline, three-month average, growth rate of average weekly wages to a 10-year high of 3.3% in October, from just 2.4% four months earlier, might indicate that the U.K. has reached the sharply upward-sloping part of the Phillips Curve.

12 July 2017 BoJ's Curve Targeting is More Stimulatory than Base Targeting (Publication Centre)

Japanese M2 growth increased trivially in June to 3.9% year-on-year from 3.8% in May, significantly higher than the 3.2% rate in August, before the BoJ began targeting the yield curve.

22 Jan. 2015 Should We Be Scared by the Flattening Curve? (Publication Centre)

The flattening of the curve in recent months has been substantial, but in our view it is telling us little, if anything, about the outlook for growth. More than anything else, investors in longer Treasuries care about inflation, and the likely path of headline inflation clearly has been lowered by the plunge in oil prices.

22 September 2016 Yield Curve Control Will be Tricky to Implement in the Eurozone (Publication Centre)

We tend to keep a close eye on monetary policy initiatives in Japan, as the BOJ's fight to spur inflation in a rapidly ageing economy resembles the challenge faced by the ECB.

5 December 2017 The ECB Wants a Steeper Curve in 2018. Will Markets Oblige? (Publication Centre)

This week's detailed Q3 GDP data will confirm that the euro area economy is going from strength to strength.

29 November 2017 Signs Mount that the BoJ is Concerned About the Curve (Publication Centre)

BoJ Governor Kuroda has piqued interest with his recent comments on the "reversal rate", the rate at which easy monetary policy becomes counterproductive, due to the negative impact on financial intermediation.

20 April 2018 Why the BoJ Needs to Steepen the JGB Yield Curve (Publication Centre)

The BoJ yesterday published its semi-annual Financial System Report, which often gives insights into the longer-term thinking driving BoJ policy.

4 March 2019 Does the Flatter Phillips Curve Mean the Next Downturn will be Severe (Publication Centre)

Investors focussed last week on Chair Powell's semi-annual Monetary Policy Testimony, but he said nothing much new.

13 February 2018 Unit Labor Costs are Key to Inflation Outlook (Publication Centre)

Jim Bullard, the St. Louis Fed president, said last week that Phillips Curve effects in the U.S. are "weak", and that nominal wage growth is not a good predictor of future inflation.

29 May 2018 A Peek into the Abyss of an Italian Parallel Currency and Euro Exit (Publication Centre)

We have to hand it to Italy's politicians. In an economy with a current account surplus of 3% of GDP, a nearly balanced net foreign asset position and with the majority of government debt held by domestic investors, the leading parties have managed to prompt markets to flatten the yield curve via a jump in shortterm interest rates.

10 Sept. 2015 Soaring Job Openings Signal Further Labor Market Tightening (Publication Centre)

We expected a modest correction in the number of job openings in July, following the surge over the previous few months, but instead yesterday's JOLTS report revealed that openings jumped by a mind-boggling 8.1% to a new record high. In the three months to July, the number of openings soared at a 35% annualized rate. As a result, the Beveridge Curve, which compares the number of openings to the unemployment rate, is now further than ever from normalizing after shifting out decisively in 2010.

27 Aug 2019 EZ Mortgage Rates are Plunging Will Spending Rise in Response (Publication Centre)

The slide in global long-term bond yields, and flattening curves, have spooked markets this year, sparking fears among investors of an impending global economic recession.

19 Aug 2019 The BoJ will Continue to Cross its Fingers on Yield Curve Inversion (Publication Centre)

An inverted curve is a widely recognised signal that a recession is around the corner, though it's worth remembering that the lags tend to be long.

13 June. Does the Flattening Yield Curve Signal Recession? (Publication Centre)

The collapse in gilt yields last week--including a drop to a record low at the 10-year maturity--appears to be an ominous sign for the economic outlook. For now, though, the yield curve signals a further easing of GDP growth, rather than a spiral into recession. Low liquidity also means modest changes in demand are generating large movements in yields, undermining gilts' usefulness as a leading indicator.

The Street - US Yield Curve Hugs Inversion: Recession Signal Clouded by Negative Global Rates (Media Centre)

Chief U.S. Economist Ian Shepherdson discussing the latest from the Fed

21 July 2017 BoJ to Allow Foreign Tightening to Ease Japanese Policy, for now (Publication Centre)

Governor Kuroda commented yesterday that he doesn't think Japan needs more easing at this stage. If he means that the BoJ does not have to change policy to provide more easing then we think he is right, on two and a half counts. First, Japan is likely to receive a boost under its current framework as external rate rises exceed expectations, driving down the yen.

21 January 2019 Governor Kuroda is at the Last Chance Saloon, Q2 is it (Publication Centre)

Forecasting BoJ policy for this year is trickier than it has been in a long time.

21 July 2017 Don't Bet the Farm on a Major QE Decision in September (Publication Centre)

The ECB pressed the repeat button yesterday. The central bank maintained its refinancing rate at 0.00%, and also kept the deposit and marginal lending facility rate at -0.4% and 0.25 respectively. The pace of QE was held at €60B per month, scheduled to run until the end of December, "or beyond, if necessary."

22 July 2019 Will Mr. Draghi Set a New CPI Target for Ms. Largarde to Pursue (Publication Centre)

Speculation that the ECB is considering a rethink of its inflation target has intensified in the past few weeks.

22 May 2019 How Much Attention is the Fed Paying to the Trimmed Mean PCE (Publication Centre)

Fed policymakers surprised no one with their May 1 statement, which acknowledged the surprisingly "solid " Q1 economic growth--at the time of the March 19-to-20 meeting, the Atlanta Fed's GDPNow model suggested Q1 growth would be just 0.6%--but stuck to its view that low inflation means the FOMC can be "patient".

22 May 2019 The MPC Won't Be "Indifferent" if Sterling Falls Further (Publication Centre)

On a trade-weighted basis, sterling has dropped by only 1.5% since the start of the month, but it is easy to envisage circumstances in which it would fall significantly further.

22 September 2017 How far will the Hurricanes Depress September Payrolls? (Publication Centre)

The trend rate of increase in private payrolls in the months before Hurricane Katrina in 2005 was about 240K per month.

22 March 2018 Strong Growth, Gradual Hikes, and Only a bit of Inflation, Here's Hoping (Publication Centre)

The most striking feature of the Fed's new forecasts is the projected overshoot in core PCE inflation at end-2019 and end-2020, which fits our definition of "persistent".

20 Sept 2019 Next BoJ Meeting is Live it's About Cost-Minimisation, not Expansion (Publication Centre)

The big question left by the BoJ at yesterday's meeting is how, if at all, they will follow up in October.

21 September 2018 Brazilian Policymakers Start to Open the Door for Rate Hikes (Publication Centre)

Brazil's domestic economic outlook has not changed much recently.

22 Jan. 2015 End of the Road for The ECB - Sovereign QE or Chaos (Publication Centre)

Investors will get what they want today from the ECB: additional easing in the form of government bond purchases. The central bank is likely to announce or pre-commit to sovereign QE and corporate bond purchases in a new program that will last at least two years.

21 June 2018 What Does Enhanced Forward Guidance Mean for Bond Yields (Publication Centre)

Last week's ECB meeting--see here--made it clear that the central bank does not intend to jump the gun on rate hikes next year, even as QE is scheduled to end in Q4 2018.

20 April 2018 The EZ current account surplus is rising (Publication Centre)

The EZ's current account surplus is solid as ever, despite falling slightly in February to €35.1B, from an upwardly-revised €39.0B in January.

19 May 2017 Expect a Hike on June 14 Unless Financial Conditions Tighten, a Lot (Publication Centre)

The probability of a rate hike on June 14, as implied by the fed funds future, has dropped to 90%, from a peak of 99% on May 5.

2 April 2019 The Easter Effect is Playing Tricks with Eurozone Inflation Data (Publication Centre)

Inflation in the Eurozone stumbled at the end of Q3.

19 June 2019 Mr. Draghi all but Promises Further Monetary Easing in Sintra (Publication Centre)

It is a known axiom among EZ economists that the ECB never pre-commits, but yesterday's speech by Mr. Draghi in Sintra--see here--is as close as it gets.

19 June 2019 Market-based Recession Indicators Are Not Flashing Red (Publication Centre)

We doubt there will ever be a fail-safe leading indicator of when a recession is about to hit, but asset prices can help us to assess the risks, at least.

19 Dec 2019 The Philly Fed Likely is Still Outperforming, Treat with Caution (Publication Centre)

The next couple of rounds of business surveys will capture firms' responses to the Phase One trade deal agreed last week, though the news came too late to make much, if any, difference to the December Philly Fed report, which will be released today.

19 June 2017 Forget About Tapering, it's Done. Next, the Quantity Target Will go (Publication Centre)

The BoJ left its policy levers unchanged at the Monetary Policy Committee meeting on Friday. At the press conference, Governor Kuroda was repeatedly asked about the status of the ¥80T annual asset purchase target and what the exit strategy would be.

2 August 2018 No Change in the Message from the FOMC Expect Sep. Dec. Hikes (Publication Centre)

The FOMC did nothing yesterday and said nothing significantly different from its June statement, as was universally expected.

2 August 2018 The MPC Won't Pull Its Punches When it Raises Rates Today (Publication Centre)

Investors awaiting today's interest rate decision might be a little unnerved to learn that the MPC has a track record of surprises.

20 June 2018 Japan's Banks have Taken Over from European Banks Post-GFC (Publication Centre)

We repeatedly have highlighted Japanese banks' foreign activities as source of rising risk for Japan and the global financial system.

20 March 2017 If Fundamental Tax Reform Fails, What Happens to Fiscal Policy? (Publication Centre)

The White House Budget for fiscal 2018, released last week, has no chance of becoming law in anything like its current form, so we don't propose to spend much time dissecting it. But we do need to set out our view on what might actually happen to fiscal policy over the next few months, because it potentially could make a material difference to the pace, and ultimate extent, of Fed tightening.

20 Dec 2019 Next Stop for the BoJ, Increase Flexibility of the Framework (Publication Centre)

The BoJ held firm, for the most part, during this year's bout of central bank dovishness.

20 Dec 2019 Expect a Benign November Core PCE, but Change is Coming in Q1 (Publication Centre)

Under normal circumstances, the 0.23% increase in the core CPI, reported earlier this month, would be enough to ensure a 0.2% print in today's core PCE deflator.

2 Dec 2019 EZ Core Inflation is Rising, but It Probably Overshot in November (Publication Centre)

The key detail in Friday's barrage of economic data was the above-consensus increase in EZ inflation.

23 August 2018 No Help for Eurozone Equities from Macro-Liquidity Indicators (Publication Centre)

The story in EZ capital markets this year has been downbeat.

20 November 2017 PBoC Lets up After Tightening Ahead of Fed Hikes (Publication Centre)

The PBoC has let up on its open-market operations after allowing bond yields to move higher again in October.

26 June 2017 Banxico's Hiking Cycle is Likely Over, While the BCB eyes a 100bp (Publication Centre)

Banxico raised its benchmark interest rate by another 25bp to 7.0% at last Thursday's policy meeting. This hike follows nine previous increases, totalling 375bp since December 2015, in order to put a lid on inflation expectations and actual inflation. Both have been lifted this year by the lagged effect of the MXN's weakness last year, the "gasolinazo", and the minimum wage increase in January.

4 May 2018 Don't Let an Outlier Dictate Your View on the ECB's Policy Path (Publication Centre)

We recommend that investors take yesterday's inflation data in the Eurozone with a pinch of salt. The headline rate slipped to 1.2% in April, from 1.4% in March, hit by a slide in core inflation to 0.7%, from 1.0%.

5 July. 2016 Can We be Sure The Labor Market is Tight Enough to Boost Wage Gains? (Publication Centre)

We have argued consistently for some time that the next year will bring a clear acceleration in U.S. wage growth, because the unemployment rate has fallen below the Nairu and a host of business survey indicators point to clear upward wage pressures. Nominal wage growth has been constrained, in our view, by the unexpected decline in core inflation from 2012 through early 2015, which boosted real wage growth and, hence, eased the pressure from employees for bigger nominal raises.

30 May 2019 More Pain Before the Gain Will Markets Force Trump to the Table (Publication Centre)

The trade war with China is not big enough or bad enough alone to push the U.S. economy into recession.

30 July 2018 Do Rising Tokyo CPI Housing Costs Matter for the BoJ's July Meeting? (Publication Centre)

Tokyo inflation surprised us on Friday, rising to 0.9% in July, from 0.6% in June.

29 October 2018 The Fed Wants to See Faster Wage Growth, but its Limit is not Far Off (Publication Centre)

We want to revisit remarks from Fed Vice-Chair Clarida last week.

3 September 2018 The ECB is Fighting an Uphill Battle to Push Core Inflation to 2% (Publication Centre)

We are all for ambitious economic targets, but the ECB's pledge to drive EZ core inflation in the Eurozone up to "below, but close to" 2% is particularly fanciful.

5 June 2019 EZ Inflation will Fall Further in Q3 but the Core Rate will Rebound (Publication Centre)

Inflation in the Eurozone tumbled last month, increasing the pressure on Mr. Draghi to deliver another dovish message when the central bank meets on Thursday.

5 March 2018 China's NPC Annual Session Expectations, Targets and Personnel (Publication Centre)

China's National People's Congress is set to convene its annual meeting next week.

8 December 2017 Chinese Outflows Picking up? FX Reserves to Fall Again in 2018 (Publication Centre)

China's FX reserves rose to $3119B in November from $3109B in October. But the increase is explained by simultaneous yen, euro and sterling strength, which raises the dollar value of assets denominated in these currencies.

9 Aug 2019 Still No Recession Signalled by Financial Market Indicators (Publication Centre)

Financial markets have gone into another tailspin over the last fortnight, triggered by rising concern about the possibility of a no-deal Brexit and President Trump's threat of further tariffs on Chinese goods.

7 November 2018 No Sign of Slowing Labor Demand it's Rising Faster than Supply (Publication Centre)

The flow of data pointing to strength in the labor market has continued this week, on the heels of last week's report of a 250K jump in October payrolls.

6 October 2017 Political Risks are Rising in the Eurozone, Should Markets Care? (Publication Centre)

Political risks have been making an unwelcome comeback in the Eurozone in the past month. In Germany, last month's parliamentary elections--see here--has left Mrs. Merkel with a tricky coalition- building exercise.

6 Aug 2019 How Credible are China's Threats in Response to Trade War Escalation? (Publication Centre)

We've always said that China's first weapon, should the trade war escalate, is to do nothing and allow the RMB to depreciate.

28 November 2017 The EZ Economy Won't Tell us What Happens Next in Equities (Publication Centre)

This year has been a story of two halves for EZ equities. The MSCI EU ex-UK jumped 11% in the first five months of 2017, but has since struggled to push higher.

27 September 2017 Is Abe Pulling a May? Consumption Tax and BoJ Head are at Stake (Publication Centre)

The last few years have thrown up surprise after surprise for establishment parties. Mr. Abe's Liberal Democrat Party is about as establishment as they come.

24 October 2017 China's Property Slowdown Intensifies, More to Come (Publication Centre)

In his opening speech at the Party Congress, President Xi received warm applause for his comment that houses are "for living in, not for speculation".

25 June 2018 In the Race to the BoJ's Inflation Target, our Money is on the Glacier (Publication Centre)

Japan's headline inflation will be volatile for the rest of the year, thanks to movements in the noncore elements.

24 July 2017 Not Much Upside for Eurozone Equities in the Rest of 2017 (Publication Centre)

The tailwinds that have propelled Eurozone equities higher since the middle of last year remain place, in principle. In the economy, political uncertainty in the euro area has turned into an opportunity for further integration and reforms, and cyclical momentum in has picked up. And closer to the ground, fundamentals also have improved.

24 Feb. 2015 Labor Data Set to Change Yellen's Tone at Today's Testimony? (Publication Centre)

Fed Chair Yellen is a committed believer in the orthodox idea that inflation is largely a cost-push phenomenon, and that the most important cost, by far, is labor. So in order to predict what Dr. Yellen might say about the outlook for Fed policy in her Testimony today--beyond the language of the January FOMC statement--we have to take a view on her assessment of the state of the labor market.

23 November 2017 Is EZ Consumption on Track for Grand Finish to 2017? (Publication Centre)

Yesterday's advance consumer sentiment index in the Eurozone confirmed the upside risks for consumers' spending in Q4. The headline index rose to a 17- year high of +0.1 in November, from -1.0 in October.

26 April 2018 All Set for a Dovish ECB Meeting Today? (Publication Centre)

The ECB will leave its main refinancing and deposit rates at 0.00% and -0.4% unchanged today, and it will also maintain the pace of QE at €30B per month.

26 February 2018 Look for the Forest Among the Trees in the EZ Core Inflation Data (Publication Centre)

Friday's final CPI report in the Eurozone confirmed that inflation dipped marginally in January, by 0.1 percentage points, to 1.3%.

27 April 2017 The Path to Implementing Huge Tax Cuts Looks Insurmountably Steep (Publication Centre)

The tax plan released by the administration yesterday was so thoroughly leaked that it contained no real surprises. The border adjustment tax is dead -- not that we thought it would have passed the Senate in any event -- and the centerpiece is a proposed cut in the corporate income tax rate to 15% from 35%.

27 February 2019 More Patience from Powell, Despite the Recovery in the Stock Market (Publication Centre)

Fed Chair Powell's semi-annual Monetary Policy Testimony yesterday broke no new ground, largely repeating the message of the January 30 press conference.

26 September 2017 Japanese Manufacturing Regaining Momentum on External Demand (Publication Centre)

Mr. Abe yesterday called a snap general election, to be held on October 22nd; more on this in tomorrow's Monitor. For now, note that the election comes at a reasonably good stage of the economic cycle, hot on the heels of very rapid GDP growth in Q2, while the PMIs indicate that the economy remained healthy in Q3.

26 Sept 2019 The "Repo Crisis" is no Technicality Think Central Bank Divergence (Publication Centre)

After the disruption in repo markets last week, theories are flying as to what's going on.

19 Aug 2019 Resistance is Futile in the EZ Fixed Income Bull Market... For Now (Publication Centre)

The ECB's communication to markets has been clear this year. In Q1, the central bank changed its stance on the economy towards an emphasis on "downside risks to the outlook".

23 July 2018 Japan's CPI Inflation is Set to Slow Again, Forcing a BoJ Change of Tack (Publication Centre)

Japan's CPI inflation was unchanged in June, at 0.7%, despite strong upward pressure from energy inflation.

16 January 2018 Will the BoJ's Stealth Taper Damage Japan's Economic Growth? (Publication Centre)

Japanese M2 growth slowed sharply in December, to 3.6% year-over-year, from 4.0% in November, with M3 growth weakening similarly. It is tempting to ask if the BoJ's stealth taper finally is damaging broad money growth.

12 Sept 2019 Mr. Draghi and the ECB Won't Fail Us Today... We Hope (Publication Centre)

Today's ECB meeting is supposed to be a slam-dunk.

12 July 2018 Does Operation Twist in the Eurozone Make Sense (Publication Centre)

It would take nothing short of a catastrophe in coming months for the ECB to alter its plan to end QE via a three-month taper between September and December.

12 July 2017 Financial Conditions in the Eurozone are Tightening, Slowly (Publication Centre)

The debate about the ECB's policy trajectory is bifurcated at the moment. Markets are increasingly convinced that a rapidly strengthening economy will force the central bank to make a hawkish adjustment in its stance.

18 Nov 2019 What Rate Cuts? Markets Now Look for Unchanged ECB Policy (Publication Centre)

he ECB governing council gathered last week under the leadership of Ms. Lagarde for the first time to lay a battle plan for the course ahead.

12 September 2017 Government Bonds in the EZ Enjoy Support Even Without QE (Publication Centre)

The EZ government bond market has been in a holding pattern for most of 2017. The euro area 10- year yield--German and French benchmark--is little changed from a year ago, though it is at the lower end of its range.

13 December 2018 Expect a Dovish Mr. Draghi Today, but Don't Bet Money on It (Publication Centre)

We suspect that today's ECB meeting will be a sideshow to the political chaos in the U.K., but that doesn't change the fact that the central bank's to-do list is long.

13 July 2017 Yellen Expects the Labor Market to Tighten Further, and Rates to Rise (Publication Centre)

Chair Yellen broke no new ground in her Testimony yesterday, repeating her long-standing view that the tightening labor market requires the Fed to continue normalizing policy at a gradual pace.

13 July 2017 The Eurozone Economy Maintained Momentum in Q2 (Publication Centre)

Yesterday's data showed that industrial production in the Eurozone accelerated at the end of spring. Output, ex-construction, jumped 1.3% month-to-month in May, much better than the downwardly-revised 0.3% rise in April; the rise pushed the year-over-year rate up to a six-year high of 4.0%.

13 Jan 2020 Labor Market Strength Means no Need for the Fed to Ease this Year (Publication Centre)

Here's the bottom line: U.S. businesses appear to have over-reacted to the impact of the trade war in their responses to most surveys, pointing to a serious downturn in economic growth which has not materialized.

11 Sept 2019 The Labour Market no Longer Looks Bulletproof (Publication Centre)

A cursory glance at July's labour market report gives no cause for alarm. The headline, three-month average, unemployment rate returned to 3.8% in July, after edging up to 3.9% in June.

11 October 2017 JOLTS Data Signal Rapid Job Gains, and Tight Labor Supply (Publication Centre)

Today's JOLTS survey covers August, which seems like a long time ago. But the report is worth your attention nonetheless.

1 November 2018 A EZ Inflation Report Straight From the ECB's Hymn Sheet (Publication Centre)

The ECB will be satisfied, and a bit relieved, with yesterday's economic data in the Eurozone.

1 November 2017 BoJ Signals Intransigence as Global Central Banks Tighten (Publication Centre)

The BoJ kept monetary policy unchanged yesterday, as expected, with the signal coming through loud and clear: Japan's central bank will continue its aggressive easing policy until the inflation cows come home...

1 March 2017 Don't Fret over Rising TARGET2 Imbalances in the Eurosystem (Publication Centre)

The Eurozone's TARGET2 system is a clearing mechanism for the real-time settling of large payments between European financial intermediaries. It's an important piece of financial architecture, ensuring the smooth flow of transactions. But we struggle to see these flows containing much information for the economy.

10 January 2019 Fed Doves Sound, Well, Dovish... but don't Ignore the Warning from Evans (Publication Centre)

The latest batch of FOMC speakers yesterday, together with the December minutes--participants said "the committee could afford to be patient about further policy firming"--offered nothing to challenge the idea, now firmly embedded in markets, that the next rate hike will come no sooner than June, if it comes at all.

11 April 2018 President Xi Jinping Says the Grand Bargain is There for the Taking (Publication Centre)

President Xi Jinping yesterday reiterated China's commitment to reform and the opening of its economy at a highly-anticipated speech at the Boao forum.

11 May. 2016 Outside the Oil Sector, the NFIB Survey Points to Decent Capex (Publication Centre)

We're pretty sure our forecast of a levelling-off in capital spending in the oil sector will prove correct. Unless you think the U.S. oil business is going to disappear, capex has fallen so far already that it must now be approaching the incompressible minimum required for replacement parts and equipment needed to keep production going.

11 Feb. 2015 Soaring Job Openings Suggest Super-Easy Money is Now Risky (Publication Centre)

Back in April 2012, Janet Yellen--then Fed Vice-Chair--spoke in detail about the labor market and monetary policy. The key point of her labor market analysis was that it was impossible to know for sure how much of the increase in unemployment--at the time, the headline rate was 8.2%--was structural, and how much was cyclical.

11 August 2017 Commodities Driving Japan's PPI, a Weaker Yen is Needed to Lift CPI (Publication Centre)

Japanese PPI inflation rose sharply to 2.6% in July from 2.2% in June, well above the consensus for a modest rise.

13 Nov 2019 Japan's Pending Stimulus Marks a Return to the Bad Old Days (Publication Centre)

PM Abe last week asked the cabinet to put together a package of measures in a 15-month budget aimed at bolstering GDP growth through productivity enhancement, in addition to the shorter-term goal of disaster recovery.

12 December 2017 After Micro-loans Crackdown, China's Offshore Borrowing is Next (Publication Centre)

Chinese monetary conditions show signs of a temporary stabilisation. M2 growth picked up to 9.1% year-over-year in November from 8.8% in October, though largely as a correction for understated growth in recent months.

16 Sept 2019 Textbook EZ Wage Data, but the Policy Response Won't Be (Publication Centre)

Last week's policy announcement by the ECB and Mr. Draghi's plea to EU politicians to deliver a fiscal boost, indicate that we're living in extraordinary economic times.

16 Dec 2019 The Trade Deal Should Lift Business Sentiment, but Modestly (Publication Centre)

The "Phase One" China trade deal announced late last week is a step in the right direction, but a small one. With no official text available as we reach our deadline, we're relying on media reporting, but the outline of the agreement is clear.

16 August 2017 As Good as it Gets for German GDP Growth in 2017? (Publication Centre)

Yesterday's Q2 GDP report in Germany was solid, but the headline disappointed slightly. GDP growth slowed to 0.6% quarter-on-quarter from an upwardly- revised 0.7% rise in Q1. The year-over-year rate, however, rose to 2.1% from a revised 2.0% in Q1.

17 Dec 2019 Behind the Rebound in November IP, the Underlying Trend is Flat (Publication Centre)

The November industrial production numbers will be dominated by the rebound in auto production following the end of the GM strike.

17 July 2019 Punchy Wage Gains are Tying the MPC's Hands (Publication Centre)

Labour costs are rising so quickly that the MPC cannot justify an "insurance" cut in Bank Rate to counteract the impending damage from Brexit uncertainty in the run-up to the October deadline.

14 Aug 2019 What is the Core Inflation Rate in Germany We Wish We Knew (Publication Centre)

German inflation data are more noise than signal at the moment.

18 December 2017 Tankan Shows this is no Ordinary Japan, Are Animal Spirits Back? (Publication Centre)

The incidence of the phrase "since the early nineties" has increased sharply in our Japan reports this year.

18 Dec 2019 Boeing's Production Cut will Depress GDP Slightly, IP Hit Much Harder (Publication Centre)

Boeing's announcement that it will temporarily cut production of 737MAX aircraft to zero in January, from the current 42 per month pace, will depress first quarter economic growth, though not by much.

16 April 2018 Banxico and BCRP to Keep Rates Cautiously on Hold this Year (Publication Centre)

Last week, the Bank of Mexico unanimously voted to leave the main rate on hold, at 7.50%, its highest level since early 2009.

18 June 2018 When is a BoJ Dove not a Dove? When the Experiment has Failed (Publication Centre)

Governor Kuroda has sounded increasingly dovish recently.

14 June 2017 Fact-checking the ECB on Low Wages and Employment in the EZ (Publication Centre)

Today's employment report in the euro area should extend the run of positive labour market data. We think employment rose 1.4% year-over-year in Q1, accelerating marginally from a 1.2% increase in Q4.

14 July 2017 Core Inflation Pressures in the Eurozone Will Rise in Q3 and Q4 (Publication Centre)

Bond investors in the Eurozone are licking their wounds following a 40 basis point backup in 10-year yields since the end of last month. Nothing goes up in a straight line, but we doubt that inflation data will provide much comfort for bond markets in the short term.

15 September The MPC Signals Higher Rates Soon, but it is Racked With Doubts (Publication Centre)

The MPC surprised markets, and ourselves, yesterday with the escalation of its hawkish rhetoric in the minutes of its policy meeting.

14 June 2019 Wage Growth in the Eurozone Remains Strong... Just Sayin' (Publication Centre)

Last week's evidence of still-strong wage growth in the EZ at the start of the year almost surely has gone unnoticed as markets focus on the prospect of rate cuts, not to mention more QE, by the ECB.

14 Nov 2019 Japan's PPI Underscores More Muted Impact of Tax Hike on Prices (Publication Centre)

Japan's PPI data yesterday confirmed that October was a turning point for prices--due to the consumption tax hike--despite the surprising stability of CPI inflation in Tokyo for the same month.

15 Nov 2019 Chinese Growth Momentum Under Attack from all Angles (Publication Centre)

China's main activity data for October disappointed across the board, strengthening our conviction that the PBoC probably isn't quite done with easing this year.

15 May 2018 Debunking Popular Theories on 2018 Yen Flows (Publication Centre)

At the end of last year, we highlighted a tail risk that strain in currency basis swaps markets signalled looming yen appreciation.

15 January 2018 Volatility in the Eurozone's Bond Markets is on the Rise (Publication Centre)

Markets' reaction last week to the ECB's October meeting accounts--see here--shows that investors are beginning to take seriously the idea of an inflection point in Eurozone monetary policy.

18 Mar. 2016 Are Markets and the ECB Behind the Curve on Inflation Risks? (Publication Centre)

Barring a disaster, the four-year cyclical upturn in the euro area will continue in the coming quarters. Inflation is a lagging indicator and therefore should rise, and investors should be adjusting their mindset to higher interest rates. But the reality today looks very different. Final inflation data confirmed that the Eurozone inflation slipped to -0.2% year-over-year in February, from 0.2% in January.

14 March 2019 Korea's Labour Market Data Throw Another Curveball (Publication Centre)

Korea's unemployment rate tumbled to 3.7% in February, after the leap to 4.4% in January.

23 Jan. 2015 The ECB gets ahead of the curve with significant QE program (Publication Centre)

The ECB sent a strong signal yesterday that it is ready to fight deflation with a full range of unconventional monetary policy tools. Asset purchases, including sovereigns, to the tune of €60B per month will begin in March, and will run until end-September 2016, but Mr. Draghi noted that purchases could continue if the ECB is not satisfied with the trajectory of inflation.

22 Feb. 2016 The Fed is Ahead of the Curve but Behind the Economy (Publication Centre)

Here's something we didn't expect to write: The CPI measure of goods prices, excluding food and energy, rose in the three months to January, compared to the previous three months. OK, the increase was marginal, a mere 0.3%, but conventional wisdom has assumed for some time that the strong dollar would push goods prices down indefinitely.

23 June 2017 PBoC is to the Chinese Yield Curve as Dr Frankenstein is to the Monster (Publication Centre)

China has undoubtedly been through a credit tightening, commonly explained as the PBoC attempting to engineer a squeeze, to spur on corporate deleveraging.

31 January 2019 Powell Says No Fed Put, but Stocks Jump and the Curve Steepens (Publication Centre)

The FOMC has gone all-in, more or less, on the idea that the headwinds facing the economy mean that the hiking cycle is over.

23 May. 2016 Does the Fed Funds Laffer Curve Explain Sluggish Growth? (Publication Centre)

Like just about everyone else, we have struggled in recent years to find a convincing explanation for the persistent sluggishness of growth even as the Fed has cut rates to zero and expanded its balance sheet to a peak of $4.2T. Sure, we can explain the slowdown in growth in 2010, when the post-crash stimulus ended, and the subsequent softening in 2013, when government spending was cut by the sequester.

2 Feb. 2015 Will core inflation push the ECB to do even more QE this year? (Publication Centre)

The ECB moved ahead of the curve this month with its QE program of €60B per month, starting in March. But still-abysmal inflation data will prompt journalists to ask Mr. Draghi, at the next ECB meeting, about the conditions under which the central bank plans to do more.

19 July 2018 Sub-2% Core Inflation is Here to Stay, But the MPC Won't Blink (Publication Centre)

June's consumer price figures threw a last minute curve-ball at the MPC ahead of its key meeting on August 2.

13 Apr. 2015 A June Hike Depends on the April, May Payroll Data - Expect Strength (Publication Centre)

Treasury yields closed Friday a few basis points higher across the curve than the day before the surprisingly soft March payroll report. A combination of slightly less dovish-than-expected FOMC minutes, a hawkish speech from Richmond president Jeff Lacker, rising oil prices, and robust--albeit second-tier--data last week seem to have done the work.

*July 2018 - Asia Chartbook* (Publication Centre)

China shifts to easing but scope is limited...While the Boj is set to tweak its yield curve targets

24 January 2018 BoJ Changes Inflation Language, Faced with Dynamic Inconsistency (Publication Centre)

The BoJ voted by an 8-to-1 majority yesterday to keep the policy balance rate unchanged at -0.1%, with the 10-year yield curve target also unchanged at around zero.

14 Jan. 2015 - Small Firms Recovery Accelerates, but Labor Costs are Rising (Publication Centre)

Yesterday's data were second-tier in the eyes of the markets, but not, perhaps in the eyes of the Fed. The continued surge in job openings, which reached a 14-year high in December, means that the Beveridge Curve--which links the number of job openings to the unemployment rate--shows no signs at all of returning to normal.

4 October 2017 Can EZ Investors Still Exploit Monetary Policy Divergence? (Publication Centre)

Global monetary policy divergence has returned with a vengeance. In the U.S., despite recent soft CPI data, a resolute Fed has prompted markets to reprice rates across the curve.

ASIAN DATA WRAP 3 Dec 2019 (Publication Centre)

Headline GDP growth in Q3 was unchanged, but the revised details mostly were positive. BoJ in a holding pattern on aggregate JGB purchases; focus on curve steepening

28 Sept. 2015 Colombia Unexpectedly Raises Rates, Amid Inflation Pressures (Publication Centre)

BanRep surprised everyone late Friday, moving ahead of the curve by starting a tightening cycle that had been expected to begin later in the year or in Q1. But the seven-board member succumbed in the face of persistent inflationary pressures, and voted unanimously to hike the main interest rate by 25bp to 4.75%, the first move since April 2014.

Asia Datanote: BoJ press conference, September (Publication Centre)

In one line: We anticipate a curve-steepening move in October, combined with some sugar coating.

7 September 2017 Japanese Regular Wages Breaking out of a 20-year Stagnation? (Publication Centre)

Japanese labour cash earnings data threw analysts another curveball in July, falling 0.3% year-over-year. At the same time, June earnings are now said to have risen by 0.4%, compared with a fall of 0.4% in the initial print.

Freya Beamish

Freya Beamish produces the Asia service at Pantheon. She has several years of experience in covering the global economy, with a particular focus on China, Japan and Korea. Previously, she worked at Lombard Street Research (now TS Lombard), where she delivered research on Asia and the Global economy for over five years, latterly as the manager of the Macroeconomics group.

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