Developed Countries
This week we present our outlook for the Fed in 2023.
Investors were heartened by the November CPI report, but the Fed said not so fast. Although it snuffed out the latest mini-rally, ongoing disinflation will set the stage for another one early next year.
The November US retail sales report delivered a negative surprise. Overall retail sales fell by 0.6% m/m, marking a deterioration from October’s 1.3% m/m increase and missing expectations of a smaller 0.2% m/m decline. Notably, the November figure is the…
As expected, the ECB hiked interest rates by 50bps at its final meeting in 2022. In addition, it announced the start of quantitative tightening. Starting in March 2023, the APP portfolio will decline at a monthly rate of EUR 15 billion until the end of 2Q…
According to BCA Research’s Counterpoint service, French OATs will outperform US-T-bonds and JPY/EUR will rally. The US and China have structural imbalances that need correcting. In the case of the US, it is a structurally imbalanced labor market in which…
Both the US and China have structural imbalances that need correcting. The former has a structurally imbalanced labour market in which demand far outstrips supply. The latter has a massively overvalued housing market. The concurrent correction of these two structural imbalances in the world’s two largest economies will necessitate a sharp slowdown in global growth, and leads to several investment conclusions.
Eurozone industrial production declined by a larger-than-expected 2.0% m/m in October, following a 0.8% m/m expansion. Meanwhile, output growth slowed from 5.1% to 3.4% on a year-on-year basis. The energy sector (-3.9% m/m), durable consumer goods (-1.9% m/m)…
The Tankan survey for Q4 underscored a dichotomy in sentiment between Japan’s manufacturing and service sectors. Japan’s largest manufacturing firms’ assessment of current business conditions deteriorated for the fourth straight quarter. Meanwhile, sentiment…
As expected, the Fed slowed the pace of rate hikes at its Wednesday meeting, opting to lift interest rates by 50bps following four consecutive 75bp increases. The statement was unchanged, with the Fed reiterating that it “anticipates ongoing increases in the…
BCA’s annual outlook for 2023 concludes that “either the onset of recession in the US, or a further decline in risky asset prices in anticipation of an eventual US recession, will likely occur at some point next year.” The report also highlights that the…