Economy
Deflation prevails in China’s economy. Marginal interest rate cuts will be insufficient to boost growth as the economy is experiencing debt deflation and might be entering a liquidity trap. There will likely be more economic disappointments in the coming months. Chinese stocks will continue to sell off. Government bond yields will fall to new lows, and the RMB will depreciate further against the US dollar.
Results of the Philadelphia Fed’s August Nonmanufacturing Business Outlook Survey sent a negative signal on Tuesday. The diffusion index for firms’ assessment of general business activity across the region relapsed and fell by 14.5 points to -13.1, indicating…
Chinese authorities have recently ratcheted up support for the currency. The PBoC continues to set its daily yuan fixing at a stronger-than-expected rate, with the yuan midpoint (a reference for trading that caps the range between +/-2%) at 7.1992 per dollar…
The latest update of the Atlanta Fed’s Home Ownership Affordability Monitor (HOAM) – which gauges a median-income households’ ability to absorb annual costs related to owning a median-priced home – is now at its lowest level since last October. At 69.5 in…
The jubilant summer rally came to a halt in August, with the S&P 500 down 4.4% MTD. A confluence of factors has weighed on the performance of US equities ranging from economic malaise in China to too-hot economic data and surging long Treasury yields at home.…
According to BCA Research’s US Political Strategy service, the Democratic Party is favored to win the 2024 election as long as it is not discredited by a major shock. But recession odds are not low. The US economy has enjoyed a lot of positive surprises this…
Investors should prepare for an equity market pullback this fall, prefer Treasuries over stocks, and US defensives over cyclicals. A pullback could also morph into another bear market given that monetary policy is tight, policy uncertainty will spike, global growth is slowing, and geopolitical risks are still high.
To the extent that Taiwanese export orders are a bellwether for global trade dynamics, the latest update for July provides a less pessimistic signal about the manufacturing cycle. It shows the pace of decline slowed sharply from 24.9% y/y in June to 12.0% y/y…
In an Insight last month, we noted that the Global Investment Strategy service increased its subjective odds for the resurgence of US inflation later this year or early next year from 20% to 30%. Here are some of the data points that they track and that point…
According to BCA Research’s European Investment Strategy service, German yields are unlikely to experience a decisive break out that would carry them to 3%. Five economic forces suggest that German yields are unlikely to move meaningfully higher in the coming…