Macro Pulse

Financial markets have been a little more unsettled in recent days as recession fears have resurfaced again in several major economies. Those fears have been amplified by remarks from central bankers suggesting that further monetary policy restriction is likely. Still, most gauges of financial market stress have not signalled any significant instability in recent weeks. In our charts this week we...

A recurring theme in the dataflow over the past week concerns the potency of monetary policy. Another positive CPI surprise from the UK and a 50bps hike from the BoE have, in particular, offered a stark reminder that central banks are struggling to calibrate monetary policy at an appropriate level. Against that backdrop our charts this week home in on the following themes: ·         The re-renewed...

Central banks have stolen the limelight over the past few days but with policy shifts that reveal stark differences - and perhaps greater disagreement - about the outlook for their respective economies. Receding headline inflation pressures, in the meantime, has been a key theme in the dataflow. But stubborn core inflation and still-tight labour markets are still clearly leaving central banks nerv...

Financial market sentiment has continued to improve in recent days in part due to the removal of uncertainty surrounding the US debt ceiling. However, as some of our exhibits this week suggest, the world economy is not yet out of danger. Our charts specifically home in on the following factors: Fading global supply chain pressures Weaker inflation in the euro area The slowdown in China’s trade The...

The world economy’s underlying vulnerabilities have been in sharp focus over the past few weeks, but more deep-seated wounds with longer-lasting scars have been avoided, at least for now. Still, the avoidance for now of bigger wounds does not mean that these vulnerabilities have been erased. In our charts this week we focus on: Negative global growth surprises The recent strength of the US dollar...

Lingering concerns about US debt ceiling negotiations have left financial markets on the back foot over the past few days. But incoming economic data this week have not helped. With that in mind our charts this week offer some perspectives on the following factors:   ·         Market expectations for Fed policy ·         Global growth surprises and copper prices ·         Economic growth in Asia’s...

Financial markets were a little unsettled earlier this week but heightened optimism about the willingness of US politicians to raise the US debt ceiling has calmed some fears. Incoming economic data, however, have taken a turn for the worse and there is arguably now mounting evidence to suggest that tighter monetary policy is beginning to exact a heavier toll. Against this backdrop, our charts thi...

This week’s key release, namely April’s US CPI data, more or less met market expectations while on the policy front the Bank of England matched forecasts too in hiking the Bank rate by 25bps. Otherwise the stability of the US banking sector and debt ceiling politics were a couple of themes for investors to additionally focus on.

Financial market jitters have resumed in recent days in part because of renewed concern about funding pressures in the US banking sector. Forward-looking US economic data have additionally disappointed expectations and continue to flag non-negligible risks of a recession in the period ahead.

Concerns in financial markets about the health of the US and European banking sectors have continued to ebb in recent days leaving more familiar macro factors to re-take centre stage. The focus this week in particular has been on the Q1 US earnings season but some stronger-than-expected GDP data from China and another positive inflation surprise from the UK were also in the limelight. 

The IMF has trimmed its global growth outlook for this year and flagged downside risks from a potential further flare up of financial instability. Lingering concerns about high inflation and tight labour markets were also emphasised, not least because a further monetary policy response might re-ignite financial market tensions. In our charts this week we pick up on these themes. 

The additional liquidity support that’s been offered by central banks, and the Fed in particular, coupled with heightened expectations of a pivot toward looser monetary policy have allayed concerns about banking sector stress in recent weeks. Many observers, nevertheless, are questioning whether the conditions that ultimately warrant this additional policy support will be positive for growth and p...

A more positive mood in financial markets has unfolded so far this week as fears about the health of the world’s banking sector have ebbed. For how long that more positive mood endures is, however, still open to much debate. Most of our charts this week we weigh in on that debate with some fresh insights on the recent dataflow.

Financial market sentiment has improved over the last few days thanks to reassuring communications and targeted policy support from central banks as well as a high profile acquisition in Switzerland. Although the Fed has subsequently enacted a 25bps rate hike, Chairman Powell has further assuaged market fears by suggesting the US tightening cycle is nearly complete.

Growing fears about the underlying health of the world’s banking sectors have dominated the financial headlines in recent days and a trend toward risk aversion has clearly been in the ascendancy. Central banks, in the meantime, are now under more pressure to offer targeted support and more generally to halt their tightening campaigns in order to restore financial stability.

Against a backdrop where the US economy has been showing unexpected resilience and firmer-than-expected inflation it was perhaps unsurprising that Fed Chairman Powell suggested in testimony this week that monetary policy could remain tighter for longer. Still, as many of our charts suggest this week, the broader world economy is now undeniably sitting on more fragile foundations, no doubt in part...

Having begun 2023 on a more upbeat footing, the mood in financial markets has continued to sour over the past few weeks. Incoming data suggest that labour markets are too tight and that inflation is too high for comfort, especially for central banks. And this combination has added to the case for further policy tightening. Most of our charts this week home in on these inflation and policy themes.

Financial markets have been pricing in tighter-for-longer monetary policy settings in recent weeks thanks to some firmer-than-expected US data. And this is now reversing the shift from a hard to a soft landing consensus that had begun to form in January. Our charts this week, however, turn the focus back onto some of the more positive trends that have established themselves in recent times.

The shift toward a soft landing consensus that had been in vogue since the start of this year has suffered some setbacks over the past two weeks thanks to last week’s strong US jobs data and this week’s firmer-than-expected US CPI report. We pick up on this theme in some of our charts this week. 

Last Friday’s much stronger-than-expected US jobs report has set the tone for financial markets in the past few days. But it has not yet meaningfully derailed the more upbeat narrative concerning inflation and monetary policy that’s been in vogue since the start of this year. Listen now for the full analysis.