Pantheon Macroeconomics

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Key Issues

Quantitive Easing

7 Dec 2021 Under Duress, and Trying to Sound Upbeat, the PBoC Acts

Evergrande, and a nudge from upstairs, seem to have forced the PBoC's hand. A 50 bps cut to the RRR frees up funds to deal with the clean-up operation, not supercharge growth. More cuts will be needed, with growth likely to remain soft in Q1 of next year.

Craig BothamChina+

2 Dec 2021 Bottlenecks Continued to Ease on the Eve of Omicron

Korean exports beat expectations in November, though we think the data overstate performance. Supply chains are still improving at the margins, even if U.S. ports remain congested. The Omicron variant is a risk to this recovery, but will not derail it entirely.

Craig BothamChina+

1 Dec 2021 Stability and the Easing of Stagflation Risk in China

Chinese economic momentum stabilised in November, thanks to policy action. The end of the energy crisis has boosted output, and eased some bottlenecks. Infrastructure support looks to be arriving, propping up construction as property struggles.

Craig BothamChina+

25 Nov 2021 Infrastructure Spending is Coming, but Less than you Hope

Policymakers are low on options to support economic growth amidst multiple headwinds. Infrastructure investment is the surest way to ensure money is actually spent... ...But local governments may still have difficulties spending it, given a lack of viable projects.

Craig BothamChina+

23 Nov 2021 Bottlenecks and Chinese Policy to Ease, but Keep Calm

Korean trade data show further signs of an easing in congested supply chains. Chinese policymakers turn more dovish, but no real relief for the property sector. Renminbi strength starts to bother the PBoC, but "two-way volatility" is more likely than devaluation.

Craig BothamChina+

19 Nov 2021 Regional Trade Data Highlight Persistence of Supply Pressures

Japan's October exports repeated the message of other regional trade data... ...Supply chains remain snarled, and bottlenecks are still narrow, and tight. We think November will prove to be a high-water mark, but tankers have a big turning circle.

Craig BothamChina+

12 Nov 2021 Halloween is Over, but China will Provide a Late October Scare

China's economy likely slowed in October, as energy outages worsened and property stress spread. We think recent excitement over property sector stimulus is misplaced. Retail sales should do better than expected, but it won't last.

Craig BothamChina+

11 Nov 2021 Chinese Inflation Spikes, but Policymakers Won't Panic

Food and energy prices drove Chinese consumer price inflation sharply higher in October. Partial energy liberalisation, coupled with soaring coal prices, led to record PPI inflation. We think both spikes will be transitory, and will not necessitate a monetary policy response.

Craig BothamChina+

21 Oct 2021 EZ Inflation is Still Red Hot, but a Cyclical Peak is Close

Euro area energy inflation will rise further in Q4, but we think the core rate has peaked. Risks are tilted towards persistently high core and headline inflation in the next 12 months... ...But that doesn't justify the leap in Eurozone rate expectations in the past few weeks.

Claus Vistesen (Chief Eurozone Economist)Eurozone

15 Oct 2021 Core Inflation in Germany Will Rise above 3% in the Fourth Quarter

German core inflation is still rising; we think it will hit 3%-plus in Q4, before easing in January. Electricity inflation in Spain is still rocketing, threatening consumer's real incomes and industry. Core inflation in Spain is now back at its pre-virus rate; should we be looking for an overshoot now?

Claus Vistesen (Chief Eurozone Economist)Eurozone

15 Oct 2021 The Evergrande Fiasco and Energy Prices Will Spoil the Recovery

A weak third quarter GDP print for China is a certainty, with the economy facing multiple headwinds. Early data hint at the damage done, but September is just the start. The real pain from the dual crises will be felt in Q4 and beyond.

Craig BothamChina+

13 Oct 2021 A Hawkish Hold, but Future Hikes Likely to be Interrupted

The BoK struck a hawkish note despite holding rates, strongly suggesting a November hike. Household debt remains the focus of policy, but there's a risk of complacency over growth. China is still deteriorating, and data over the next fortnight will be just a taste.

Craig BothamChina+

5 Oct 2021 Inflation in Switzerland is Likely as High as it Gets

Inflation in Switzerland likely has peaked, keeping it lower than the headline HICP in the EZ... ...Currency effects will soon be a drag on headline inflation, to the SNB's dismay... ...Meanwhile, rising natural gas prices are no worry for the Swiss, and wage pressures are limited.

Claus Vistesen (Chief Eurozone Economist)Eurozone

21 Sept 2021 Inflation Next Year Will be a Challenge for the ECB and Markets

Our 2022 core inflation forecast signal that trouble is brewing for markets and the ECB. Core inflation will fall in Q1, but it will be back at just under 2% by spring, and through the summer. The ECB will stay dovish, but it will lift its inflation forecasts further; this will unsettle markets.

Claus Vistesen (Chief Eurozone Economist)Eurozone

31 Aug 2021 EZ Core Inflation Leapt in August, due Mainly to Technical Factors

Core inflation in the euro area rocketed in August, but we doubt that markets will notice. PEPP tapering is coming, but the overall tenor of the ECB's communication remains as dovish as ever. The EZ survey data are now softening, but that won't matter for GDP in Q3; for Q4, however, it might.

Claus Vistesen (Chief Eurozone Economist)Eurozone

12 Aug 2021 PBoC Easing Remains Unlikely, Despite July's Soft Money Data

Both M1 and M2 growth missed expectations in July, but the former arguably is due a turnaround. Slowing household demand for credit isn't exactly concerning, as they are still sitting on piles of cash. Japanese machine tool orders remain solid, indicating that the recovery in global IP is on track.

Freya Beamish (Chief Asia Economist)China+

5 Aug 2021 High Political Risk in the Andes Offsetting Upbeat Economic News

Peruvian New Sol --  President Castillo already on fire Chilean Peso --The copper-driven sell-off Colombian Peso -- Deteriorating fundamentals

Andres Abadia (Senior International Economist)Latin America

15 July 2021 How Well did the EZ Economy do in the Second Quarter?

Virus cases fell throughout the second quarter, allowing EZ governments to ease restrictions and the economy to roar back to life.

Claus Vistesen (Chief Eurozone Economist)Eurozone

12 July 2021 The RRR Cut was About Managing Interbank Liquidity

The PBoC followed through with a Reserve Requirement Ratio cut of 0.5 percentage points on Friday, hot on the heels of a strong hint to do so from the State Council meeting earlier in the week.

Freya Beamish (Chief Asia Economist)China+

9 July 2021 An RRR Cut Addresses Immediate Problems, it's not a Broad Easing

It's easy to fall into the trap of thinking that the Chinese monetary authorities are shifting to a broad-based easing stance.

Freya Beamish (Chief Asia Economist)China+

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