Highlights 10-year real Spanish and Portuguese bond yields have already fallen below the neutral rate of interest for the entire euro zone. This suggests monetary conditions could now be favorable for all euro zone countries. Should…
Highlights The European barometer that best gauges global growth is euro area growth excluding inventory adjustments. Euro area growth excluding inventory adjustments is now running at a blistering 4.2 percent nominal pace –…
Feature Markets have turned jittery in the past month. Global growth data have deteriorated further (Chart 1), with Korean exports, the German manufacturing PMI, and even U.S. industrial production weak. Moreover, trade negotiations…
Highlights Monetary policy remains accommodative in Japan, but will tighten on a relative basis if the Bank Of Japan (BoJ) stands pat. The BoJ’s margin of error is non-trivial, since a small external shock could well tip the…
Highlights The Federal Reserve’s monetary policy stance is slightly accommodative for the U.S., but it is too tight for the rest of the world. Inflation is likely to slow further before making a durable bottom toward year-end.…
Highlights A financial market riot point remains likely over the coming few months to force policymakers, including those in China, to address the economic weakness that a full-tariff scenario will entail. The near-term outlook is…
Highlights Falling Yields: There have been three main drivers of the latest decline in global bond yields: slower global growth, softer inflation expectations and increased safe-haven demand for bonds given the intensifying U.S.-China…
Highlights Currency markets continue to fight a tug of war between weak incoming data but easier financial conditions. Our thesis remains that the path of least resistance for the dollar is down, but the rising specter of global…
Highlights In the second half of 2019, economic growth will stop accelerating… …but an underpinning of equity valuations will limit sell-off magnitudes to around 10 percent or so, rather than deeper sustained plunges.…
Highlights Duration: We see current bond market behavior as very similar to mid-2016, when heightened political uncertainty obscured the economy’s true strength and kept bond yields lower for longer than was justified by the…