Demand growth is cooling, but evidence suggests that overall fundamentals are still sound.
Earlier interest-rate cuts would come as good news for the US economy.
Investors have seemed transfixed lately by endless news headlines on the path of monetary policy. But fiscal policy outcomes have far-reaching impacts on long-run growth and fundamentals in the world’s economies. On that score, many regions continue to wrestle with the challenges of deficits and debt.
Stronger economic growth is allowing the Fed to stay patient. That means a likely delayed start for expected interest-rate cuts.
The Fed poured cold water on a March rate cut, but the underlying message still has rates coming down—by a lot. Waiting for the starting point can be risky for investors.
Falling inflation hasn’t yet translated into good feelings among US consumers. Based on the latest data, that might be changing.
China’s growth has slowed, but the context is important—an intentional transition to a more balanced economy that relies less on investment and exports.
Now, is it an oversimplification to say that the upgrade to GDP growth is just down to Taylor Swift and Beyoncé? It is, to a degree, no matter how popular they are—and they are very popular indeed.
Resilient consumer spending has been a pillar of the US economy. While activity may soften, we think the consumer will help the coming slowdown stay mild.
Despite softening demand, US home prices remain elevated. The culprits are high interest rates, limited supply and owners' reluctance to take on new mortgages.
Recession? Soft Landing? Getting a read on where the US economy is headed hasn’t been easy.
Central banks in the developed world have raised interest rates higher and faster than at any time in recent memory. But until labor markets start to slow, policymakers are unlikely to take their feet off the brakes.
The big picture is that this week’s adjacent decisions by two major central banks point to a near-term divergence in policy paths between the US and Europe: the Fed is on hold and the ECB is still raising rates.
Yesterday, the Fed raised its benchmark interest rate 25 basis points to a 4.75%–5.0% range and signaled that one more hike is likely this cycle.
Over the past few decades, investors have become conditioned to expect that rising interest rates will trigger broader US financial market crises.
In a time of uncertainty, we believe that quality is the key to investing in equities.
As surging natural gas prices stoke inflation throughout Europe, policymakers are responding to both reduce the economic damage of high energy prices and clamp down on blistering inflation rates.
Investors are shifting their focus from runaway inflation to slowing global growth as central banks hike rates to tame price pressures.
High inflation and the consequences of attempts to curb it are a top concern for today’s investors.
At its March 10 meeting, the European Central Bank (ECB) surprised the market by announcing an acceleration of its tapering program—wrapping up securities purchases earlier than anticipated.
Russia’s invasion of Ukraine has shocked the global economy, in particular by fueling further spikes in energy and commodity prices. The new inflationary catalysts will have differing effects on monetary policy moves because regional economies are starting from different places, which will determine their ability to withstand higher commodity prices.
The Federal Reserve responded to stubborn inflation pressures in the US economy by doubling the pace at which it’s tapering its QE purchases. It also ramped up the number of rate hikes it expects will be needed to bring the economy back into equilibrium in the medium term.
The world’s central bankers have had to manage competing priorities during the COVID-19 era. Now that COVID-related threats to global economic growth look to be receding, the risks from higher inflation are becoming more prominent in their thinking.
After years of anxiously watching for inflation, it’s here. Unfortunately, what many expected to be a short, COVID-19-induced visit has turned into an extended stay, thanks to robust demand and a snarled supply chain. The question now is does the supply chain pose a threat to our economic outlook?
Major central banks are exploring digital currencies, which seem likely to become a mainstay of tomorrow’s economy. As policymakers wrestle with the many moving parts of digital dollars, euros and yuan, their decisions will shape the next dimension in national currency—and could reshuffle international currency leadership.
Many investors, perhaps scarred by 2013’s “taper tantrum,” are focused on the likelihood that the Federal Reserve will start reducing its bond purchases in the next few months.
US inflation continued to soar in May, with the Core Consumer Price Index (CPI) up 0.7% month over month and 3.8% year over year—its highest annual rate in more than 25 years.
With the US economy accelerating and price pressures rising, investors have started wondering when the Federal Reserve will start to wind down, or taper, its current QE asset purchases—a pillar of accommodative monetary policy since the global financial crisis.
As the US economy continues to reopen, economic growth is accelerating in line with our above-consensus forecasts.
US core inflation likely will be volatile during 2021, as underlying economic forces continue to rebalance from the pandemic.
We expect US core inflation to surge in the months ahead, as comparisons to low price levels of a year ago cause sizable fluctuations. Ultimately, supply should respond to recovering demand, bringing inflation down and facilitating easy Fed policy.
The probability of more fiscal relief from Congress has risen—good news for the US economy and a boost to our growth forecast. While risks remain, and it’s too early to talk about the pandemic in the past tense, we’re optimistic the economy can return to more normal footing soon.
With a greater level of clarity than we’ve had since the COVID-19 pandemic, we’re getting a better sense of how the US economy might shape up over the next few months, into 2022 and beyond. We see three distinct stages over that time frame.
Two recent developments could have big implications for the US economic outlook: general elections and news of very promising progress on a COVID-19 vaccine. To understand the ramifications, we have to distinguish near term from longer term.
US third quarter GDP was better than expected, though our updated economic forecasts still show a quick but incomplete recovery. Over time, this should give way to a more gradual, lengthy path back to “normal.” But there are a lot of moving parts.
With US elections about two months away, investors are intensifying their focus on the presidential and congressional contests. Historically, political transitions haven’t had much impact on the economy and markets, but this time could be different.
The Fed gave its updated economic outlook this week, but not the additional policy support markets were looking for. We think this was a misstep...but one we hope will be corrected if the outlook doesn’t improve.
The Fed continues to dismiss the idea of negative US rates but the market keeps pricing them in. We don’t expect negative rates: in our view, the market is using them as a proxy for Fed measures that may be needed but aren’t yet identified.
The onslaught of the coronavirus forced the Federal Reserve and lawmakers to take desperately needed measures. The US economy will eventually recover, but the effects of these drastic policy decisions will be felt for a long time.
The decline in US economic activity from social distancing measures and forced shutdowns is likely to be bigger than our initial guess. While we expect a recovery once the coronavirus crisis eases, we don’t have enough information yet to dimension it.
The historic US fiscal aid package isn’t a quick fix, but it provides welcome relief and will make it easier for the US economy to rebound when the coronavirus crisis eases. More important, it shows that Congress is willing to act swiftly and dynamically.
With markets reeling from concerns over the coronavirus and plummeting oil prices, the US Federal Reserve took another step Monday to shore up markets. The Fed has more in its toolbox, but fiscal policy may also be needed to fill a gap in the US economy.
This week’s Fed rate cut helped steady financial markets reeling from the expected impact of the coronavirus on the US economy, and we think more cuts are coming—in March and beyond. The economy should rebound in the second half of the year, though at a lower full-year pace.
The US and China formally signed a phase-one trade deal Wednesday after several months of negotiations. We see the deal as a near-term positive for markets—but it also leaves the thorniest issues between the two countries unresolved.
The US Fed held rates steady in December and plans to continue that stance through 2020. But a lot can happen to change the Fed’s mind—after all, it entered 2019 expecting to hike rates and ended up with three cuts. What does 2020 have in store?
The Fed has signaled it is unlikely to cut interest rates again in December, but we expect further rate cuts next year. We believe the Fed has not yet done enough to protect the economy against headwinds. While we don’t forecast a US recession, we think additional monetary policy easing will be needed to stabilize growth.
The Fed cut rates again and indicated that one more cut should be enough to shore up growth. We think more will be needed. But will rate cuts work? And if not, what else can the Fed do?
Financial markets are focused on the ongoing trade war between the US and China—which goods and services are in play and what measures are being taken or threatened in each case. But the trade conflict could spill over into currency markets—and that’s a risk that bears watching.
The Fed left its benchmark rate unchanged this week, but also signaled a very high probability of cuts later this year. Historically, rate cuts have been a sign of trouble—typically made in response to slower growth and rising unemployment. But this time around, growth data aren’t showing much weakness. What’s the story?
