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Macro News

Berenberg's economists analyse the 
macro-economic trends and are popular
ports of call for politicians and the media. 

You will find current reports here.

Chief Economist

Dr Holger Schmieding
Phone +44 20 3207-7889
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Date Title Author
27.04.2017 ECB: TOWARDS THE EXIT AT A SNAIL'S PACE

The ECB is edging closer to the exit at a snail’s pace. However, it is still far away from it. 

Holger Schmieding Macro Flash Download: :  ECB: TOWARDS THE EXIT AT A SNAIL'S PACE
27.04.2017 UK GROWTH: 10 REASONS TO BE OPTIMISTIC FOR 2017

Bad news sells: Sometimes we need to ignore the headlines. UK GDP data for Q1 due tomorrow at 9:30am will likely show that the quarterly growth rate slowed to 0.4% qoq from 0.7% in Q4. 

Kallum Pickering Macro Flash Download: :  UK GROWTH: 10 REASONS TO BE OPTIMISTIC FOR 2017
27.04.2017 TRUMP, LE PEN, AfD: COPING WITH THE POLITICS OF ANGER

So far so good: Four months into 2017, the major risks we had discussed in our Global Outlook at the start of the year have receded somewhat. 

Holger Schmieding Macro Flash Download: :  TRUMP, LE PEN, AfD: COPING WITH THE POLITICS OF ANGER
26.04.2017 TRUMP’S TAX REFORM PROPOSAL - THE ADMINISTRATION STEPS UP TO BAT

President Trump’s roll out of the Administration’s tax reform proposals represents a shift in gears that jumpstarts deliberations that will lead to enactment of significant tax policy changes.

Mickey Levy Macro News Download: :  TRUMP’S TAX REFORM PROPOSAL - THE ADMINISTRATION STEPS UP TO BAT
25.04.2017 US CONSUMER CONFIDENCE DROPS BUT REMAINS HIGH AND NEW HOME SALES SHINE

The Conference Board Consumer Confidence Index declined 4.6pts to 120.3 in April, but remains very high, at the 90th percentile of data from the last 40 years. New home sales rose 6% to an annualized 621k in March, almost matching its post-recession high from eight months ago. The consumer and housing sectors are poised to drive GDP growth to 3% in Q2 after a weak Q1.

 

Roiana Reid Macro Flash Download: :  US CONSUMER CONFIDENCE DROPS BUT REMAINS HIGH AND NEW HOME SALES SHINE
25.04.2017 EUROZONE: A FIRMER ECONOMIC RECOVERY

Life is full of risks. Politics could still go badly wrong in France. But with Macron in the pole position to be the next French president, the tail risks in the Eurozone have receded further.

Holger Schmieding Macro Flash Download: :  EUROZONE: A FIRMER ECONOMIC RECOVERY
24.04.2017 GERMAN IFO CLIMBS FURTHER, STRONG Q1 TO CARRY INTO Q2

Germany enjoying a little boom: According to the Ifo survey, the business climate improved in April to the highest since July 2011 (from 112.4 to 112.9). While political risks stemming from the French presidential elections weighed on expectations (down to 105.2, after 105.7), a strong improvement in the assessment of the current situation lifted overall sentiment (121.1 from 119.5 in March, see chart 1).

Florian Hense Macro Flash Download: :  GERMAN IFO CLIMBS FURTHER, STRONG Q1 TO CARRY INTO Q2
24.04.2017 FRENCH WRAP-UP: THE GOOD NEWS AND THE LESS GOOD NEWS

Tail risks remain. But most likely, the French election can mark a turning point for France and Europe. If Macron wins on 7 May and manages to forge a coalition of pro-reform forces ‎after the 11 and 18 June parliamentary elections, France, the Eurozone and the EU could benefit significantly over coming years.

Reform progress in France and Europe, the pro-mainstream precedents set by voters in the Netherlands and France and the likely boost to the European economic outlook could also help to keep the Italian political risks in check.

Holger Schmieding Macro Flash Download: :  FRENCH WRAP-UP: THE GOOD NEWS AND THE LESS GOOD NEWS
24.04.2017 FRANCE: HOPE SEEMS TO BEAT ANGER

 

France yearns for change. But what kind of change? After centrist reformer Emmanuel Macron qualified today for the 7 May run-off round of the French presidential election, chances are that France will get the economic reforms it needs to revive its fortunes and catch up with Germany and that France, Germany and their partners will work together to strengthen the cohesion of the Eurozone and the EU.

Holger Schmieding Macro Flash Download: :  FRANCE: HOPE SEEMS TO BEAT ANGER
21.04.2017 US: SALES OF EXISTING HOMES JUMP TO POST-RECESSION HIGH IN MARCH

Sales of existing homes rose by 4.4% to an annualized 5.71mn in March, a post-recession high. The strong gains come despite a very short supply of for-sale homes that is placing upward pressure on prices. Home prices increased by a sizable 6.8% yr/yr, a double-edged sword which increases net worth for existing home owners but keeps some potential home buyers on the sidelines.

Roiana Reid Macro Flash Download: :  US: SALES OF EXISTING HOMES JUMP TO POST-RECESSION HIGH IN MARCH
21.04.2017 EUROZONE PMIS CARRY STRONG MOMENTUM INTO Q2

Eurozone business activity rises to six-year high, despite political risks stemming from the upcoming French elections. According to flash PMIs, the upswing registered in Q1 may gain further momentum in the second quarter. 

Florian Hense Macro Flash Download: :  EUROZONE PMIS CARRY STRONG MOMENTUM INTO Q2
20.04.2017 US REGIONAL MANUFACTURING SENTIMENT WEAKENS BUT UNDERLYING DETAILS SOLID

The two major regional manufacturing surveys – Empire State and Philadelphia Fed – released thus far in April have revealed an interesting trend with the headline indexes (general business conditions) moving lower, indicating that the post-election euphoria is diminishing, but the underlying components continue to increase or are posting smaller declines than the headline indexes.

Roiana Reid Macro Flash Download: :  US REGIONAL MANUFACTURING SENTIMENT WEAKENS BUT UNDERLYING DETAILS SOLID
18.04.2017 US: SOLID Q1 FOR NEW RESIDENTIAL CONSTRUCTION AND MANUFACTURING PRODUCTION

The headline GDP number will be unflattering in Q1, due to temporary factors holding back private consumption and possibly the statistical quirkiness that has held down reported Q1 growth. This masks the solid improvement in both housing and business fixed investment which underperformed significantly in prior quarters – a welcomed support to private consumption that was the only real driver of growth in 2016. The data received today provide further support of these recent trends.

Roiana Reid Macro Flash Download: :  US: SOLID Q1 FOR NEW RESIDENTIAL CONSTRUCTION AND MANUFACTURING PRODUCTION
18.04.2017 UK: 8TH JUNE 'BREXIT' ELECTION RAISES RISK OF 'HARDER' EU EXIT

PM May seeks to strengthen her mandate: Rebuking previous promises not to hold early elections, Prime Minister Theresa May today announced that she wants to hold a snap general election on 8th June. 

Kallum Pickering Macro Flash Download: :  UK: 8TH JUNE 'BREXIT' ELECTION RAISES RISK OF 'HARDER' EU EXIT
18.04.2017 POLITICAL UPDATE: FRENCH AND GERMAN POLLS

The four-way presidential election race in France has tightened slightly further. Five days ahead of the first round on 23 April, opinion polls show a further gain for ultra-left insurgent Jean-Luc Melenchon to an average of 19.4% after 18.0% five days ago.

Holger Schmieding Macro Flash Download: :  POLITICAL UPDATE: FRENCH AND GERMAN POLLS
14.04.2017 SOFT US CPI PARTLY DUE TO ANOMALOUS FACTORS AND CORE RETAIL SALES STRONG

The Consumer Price Index (CPI) declined by a sizable 0.3% m/m (+2.4% yr/yr) in March due to lower retail gasoline prices and a stunning 0.1% m/m decline in the core CPI (excludes food and energy) – the first decline in this metric since January 2010 – pulling the yr/yr gain down 0.2pp to 2.0%. The downward surprise came in prices for wireless telephone services, which fell by 7% m/m - the largest decline in the 20 year history of the series – and subtracted 0.1pp from the headline CPI.

Roiana Reid Macro Flash Download: :  SOFT US CPI PARTLY DUE TO ANOMALOUS FACTORS AND CORE RETAIL SALES STRONG
11.04.2017 GERMAN SENTIMENT IMPROVES FURTHER: ZEW BACK TO AUGUST 2015 LEVEL

German economy enjoying a little boom: The headline expectations indicator of the ZEW survey jumped to its highest level since August 2015. 

Florian Hense Macro Flash Download: :  GERMAN SENTIMENT IMPROVES FURTHER: ZEW BACK TO AUGUST 2015 LEVEL
11.04.2017 UK: RISING INFLATION TAKES A BREATHER - BUT IT WON'T LAST, OR BE THAT BAD

A temporary breather in March: After accelerating by more than expected in February, inflation stabilised in March (2.3%). But it won’t last. 

Kallum Pickering Macro Flash Download: :  UK: RISING INFLATION TAKES A BREATHER - BUT IT WON'T LAST, OR BE THAT BAD
07.04.2017 US MARCH JOBS SLOWDOWN ATTRIBUTABLE TO BAD WEATHER

The BLS’ measure of US job growth surprised to the downside in March, rising by a meager 98k, as an unseasonably severe snowstorm during the survey period distorted estimates. Besides the weak increase in establishment payrolls, the other details in the BLS’ Employment Report were solid, consistent with other statistical releases and surveys that suggest an improving economy. The unemployment rate fell 0.2pp to 4.5%, its lowest level since May 2007.

Mickey Levy, Roiana Reid Macro Flash Download: :  US MARCH JOBS SLOWDOWN ATTRIBUTABLE TO BAD WEATHER
05.04.2017 FED MINUTES: JUSTIFY RATE INCREASE, CHANGE TO ITS REINVESTMENT POLICY SOON

The minutes of the FOMC’s March 15th meeting provided support for its decision to raise its Federal funds rate but importantly revealed an extensive discussion of the steps the Fed is considering to begin reducing the size of its balance sheet. The Fed’s portfolio has a massive $4.5 trillion in assets. With signs of the economy improving and inflation at the Fed’s long-run target, and with the normalization of interest rates already well underway, addressing the Fed’s balance sheet is long overdue.

Mickey Levy, Roiana Reid Macro News Download: :  FED MINUTES: JUSTIFY RATE INCREASE, CHANGE TO ITS REINVESTMENT POLICY SOON
05.04.2017 US NATIONAL BUSINESS SENTIMENT MIXED IN MARCH

The Institute for Supply Management’s (ISM) measure of national non-manufacturing sentiment fell more than expected in March (-2.4pts to 55.2) but remained positive in the expansionary territory, while its manufacturing index remained elevated (-0.5pt to 57.2). Unlike other regional manufacturing surveys, the ISMs cover sentiment for the full month, so some reaction to the healthcare policy reform failure was at least partially captured in the surveys.

Roiana Reid Macro Flash Download: :  US NATIONAL BUSINESS SENTIMENT MIXED IN MARCH
05.04.2017 SOLID PMIS FOR Q1 SHOW THE UK STARTED 2017 ON A FIRM FOOTING

Growth is normalising after a temporary - above-trend - acceleration in H2 2016: The surprise surge in real GDP growth in the second half of 2016 probably moderated to more normal levels at the start of the year.

Kallum Pickering Macro Flash Download: :  SOLID PMIS FOR Q1 SHOW THE UK STARTED 2017 ON A FIRM FOOTING
03.04.2017 MONDAY MACRO UPDATE: THE BREXIT GAP, FRENCH AND GERMAN POLITICS

Even in the best case, the uncertainty over the UK’s post-Brexit access to the EU27 market won’t be over when Britain leaves the EU on 29 March 2019. The two-year divorce process from the EU27 may be starting with a little misunderstanding as to what exactly the two sides can achieve until then. 

Holger Schmieding Macro Flash Download: :  MONDAY MACRO UPDATE: THE BREXIT GAP, FRENCH AND GERMAN POLITICS
31.03.2017 US PCE DEFLATOR EXCEEDS FED’S TARGET, BUT PRIVATE CONSUMPTION SOFT

The US PCE deflator rose to 2.1% yr/yr in February, exceeding the Fed’s 2% target for the first time since April 2012, while the core PCE deflator is now up 1.8% yr/yr; the upward drift in inflation suggests continued Fed rate increases are appropriate. US private consumption rose only 0.1% in February and declined by 0.1% in real terms, likely due to transitory factors. Expect a bounce back in March and upcoming months: fundamentals such as improving incomes, solid job growth, buoyant confidence and rising household net worth are positive.

Roiana Reid Macro Flash Download: :  US PCE DEFLATOR EXCEEDS FED’S TARGET, BUT PRIVATE CONSUMPTION SOFT
31.03.2017 EUROZONE INFLATION SLIPPING AGAIN AS OIL PRICE EFFECTS FADE

Not there yet: The market’s recent excitement about inflation risks in the Eurozone were premature. In March, headline inflation dropped from 2.0% yoy in February to 1.5% as past changes in costs of energy and food dropped out of the headline measure.

Florian Hense Macro Flash Download: :  EUROZONE INFLATION SLIPPING AGAIN AS OIL PRICE EFFECTS FADE
31.03.2017 UK: HOUSEHOLD APPETITES FOR MAJOR PURCHASES HIGH DESPITE EXPECTED RISE IN INFLATION

The risks to real household spending from rising inflation are grossly overstated. The latest GfK survey for March chimes with our key view, that rising inflation will not do too much damage to household spending appetites over the medium-term.

Kallum Pickering Macro Flash Download: :  UK: HOUSEHOLD APPETITES FOR MAJOR PURCHASES HIGH DESPITE EXPECTED RISE IN INFLATION
30.03.2017 US CORPORATE PROFITS ROSE MODESTLY IN 2016Q4

US corporate profits rose modestly in 2016 Q4 capping a strong year with a moderation in momentum. Before taxes and adjusted for inventory valuation adjustment (IVA) and capital consumption allowance (CCA) adjustments, operating profits rose an annualized 2.1% in Q4, following a more robust rise of annualized 25.4% q/q in Q3.  Yr/yr, operating profits rose a strong 8.8%.

Mickey Levy, Roiana Reid Macro Flash Download: :  US CORPORATE PROFITS ROSE MODESTLY IN 2016Q4
30.03.2017 EUROZONE SENTIMENT IN Q1 HITS SIX YEAR HIGH

Momentum is on the rise. Despite marginal slippage in March, economic sentiment in the Eurozone remains well above its long-term average. 

Florian Hense Macro Flash Download: :  EUROZONE SENTIMENT IN Q1 HITS SIX YEAR HIGH
29.03.2017 THE BREXIT BRIEF

Today, the UK will file for divorce from the European Union. This is the worst setback ever for the process of European integration that started with a six-nation coal and steel community in 1952. 

Holger Schmieding Macro Flash Download: :  THE BREXIT BRIEF
28.03.2017 US CONSUMER CONFIDENCE SURGED IN EARLY MARCH (PRE-HEALTHCARE REFORM FAILURE)

The Conference Board’s US Consumer Confidence Index jumped by 9.5pts in early March to 125.6 – a 16yr high. The cutoff date for this survey was March 16th, before the Trump administration and Congress’ failure to enact healthcare reform. Consumers held a very optimistic view about labor market conditions, future income and upgraded their buying plans for durables and autos.

Roiana Reid Macro Flash Download: :  US CONSUMER CONFIDENCE SURGED IN EARLY MARCH (PRE-HEALTHCARE REFORM FAILURE)
27.03.2017 POLITICAL UPDATE: US, GERMANY, FRANCE

Europe will master the populist challenge. We base all our economic and financial forecasts on this assessment.

Holger Schmieding Macro Flash Download: :  POLITICAL UPDATE: US, GERMANY, FRANCE
24.03.2017 CHART OF THE WEEK - NOT ALL INFLATION IS CREATED EQUAL

Rising inflation in the western world: Last month, headline inflation rose simultaneously to, or above, the Fed’s, the ECB’s and the BoE’s targets for the first time since October 2012. Having narrowly avoided the dreaded deflation in 2015, now we have to worry about inflation. Or do we? 

Kallum Pickering Chart of the Week Download: :  CHART OF THE WEEK - NOT ALL INFLATION IS CREATED EQUAL
24.03.2017 EUROZONE PMIS SUGGEST GROWTH ACCELERATED IN Q1

Spring is coming and Eurozone firms are cheerful – despite the political risks. The preliminary PMI composite improved from 56.0 in February to 56.7 in March. 

Florian Hense Macro Flash Download: :  EUROZONE PMIS SUGGEST GROWTH ACCELERATED IN Q1
24.03.2017 EUROPE AT 60: THE TRENDS THAT SHAPE THE FUTURE

Sixty years after the Treaty of Rome established the European Economic Community (EEC), the process of European integration as we know it seems to have reached its limits. So far the institutionalised cooperation between sovereign nation states in Europe has always grown in scope and size. With Brexit and the Le Pen challenge in France, this process is now at risk.

Holger Schmieding Macro Views Download: :  EUROPE AT 60: THE TRENDS THAT SHAPE THE FUTURE
23.03.2017 EUROZONE CONSUMERS SHRUG OFF INFLATION CONCERNS

Mood among Eurozone consumers in March recovers from its February dip. Consumer confidence rose to -5.0 in March, after -6.2 in February and -4.8 in January. Taken the three months together, the average for Q1 2017 advanced to the highest level since Q2 2007. 

Florian Hense Macro Flash Download: :  EUROZONE CONSUMERS SHRUG OFF INFLATION CONCERNS
23.03.2017 UK: STRONG REBOUND IN RETAIL SALES IN FEBRUARY, RISKS FROM INFLATION ARE EXAGGERATED

The oil and employment boost is fading: The 4.4% average annual growth in retail sales ex. autos during 2015 and 2016, and the surge to 5.8% yoy in H2 2016, was totally unsustainable. Now that the boost from cheap oil is over and employment gains slow as the labour market reaches full employment, household spending will return to more normal patterns. 

Kallum Pickering Macro Flash Download: :  UK: STRONG REBOUND IN RETAIL SALES IN FEBRUARY, RISKS FROM INFLATION ARE EXAGGERATED
22.03.2017 US: TIGHT SUPPLY OF HOMES POINTS TO NEED FOR ROBUST CONSTRUCTION

Sales of US existing homes fell by 3.7% to an annualized 5.48mn in February after reaching a post-recession high of 5.69mn in January. The very tight supply of for-sale homes is placing upward pressure on prices and constraining sales. On the other hand, the tight supply and favorable demographics both point to the need for an acceleration in residential construction which is still low.

Roiana Reid Macro Flash Download: :  US: TIGHT SUPPLY OF HOMES POINTS TO NEED FOR ROBUST CONSTRUCTION
21.03.2017 UK: UPSIDE SURPRISE ON HEADLINE AND CORE INFLATION INCREASES PRESSURE ON BOE TO HIKE

The price of Brexit: Even before Brexit creates any barriers to trade – at least two years away – UK households are already forking out more for German cars, Italian cheese and French wine. Thanks to the 13% fall in trade-weighted sterling since the Brexit vote (down 12% versus the euro), prices of imported goods are rising sharply. In February, headline inflation (CPI) hit its highest rate – 2.3% yoy - since September 2013, increasing from 1.8% in January, and beating expectations of 2.1%.

Kallum Pickering Macro Flash Download: :  UK: UPSIDE SURPRISE ON HEADLINE AND CORE INFLATION INCREASES PRESSURE ON BOE TO HIKE
17.03.2017 FRANCE AND ITALY: RISK UPDATE

Jointly with a select group of investors, I’ve just spent almost three days discussing the economic and political outlook for France and Italy with senior officials from both countries in London, Paris and Rome. We visited the finance ministries, Banca d'Italia, the OECD, industry and banking associations, and the Italian parliament. We also spoke to a number of senior consultants including a French professor specialising on constitutional law. 

Holger Schmieding Macro Flash Download: :  FRANCE AND ITALY: RISK UPDATE
16.03.2017 INDICATORS ON US OUTLOOK REMAIN STRONG

Key US economic data on the outlook continue to come in strong. Although readings on some aspects of current economic activity are mixed, and some transitory factors likely will hold down Q1 GDP growth, the outlook for stronger growth is favorable. Two key manufacturing surveys received for the first half of March – Philly Fed and Empire State – suggest that firms continue to be exceedingly optimistic about the US economy. Housing starts have exceeded an annualized 1.25 million units for the last three months after averaging under 1.2million in 2016. 

Roiana Reid Macro Flash Download: :  INDICATORS ON US OUTLOOK REMAIN STRONG
16.03.2017 UK: MPC MARCH MINUTES SHOW THE BOE SHIFTING FROM NEUTRAL TO HAWKISH

Hawkishness creeping into the MPC: While the BoE’s policy stance did not change today, there was a notable shift in the guidance for future policy amid continued strong growth and rising inflation. Kristen Forbes, a known hawk, voted for a 25bps rate hike. Meanwhile ‘some’ committee members noted that given the resilient economic performance since the Brexit vote it would ‘take very little further upside news on the prospects for activity or inflation to consider that a more immediate reduction in policy support might be warranted’.

Kallum Pickering Macro Flash Download: :  UK: MPC MARCH MINUTES SHOW THE BOE SHIFTING FROM NEUTRAL TO HAWKISH
16.03.2017 DUTCH RELIEF: THE IMPACT OF THE VOTE

A victory for common sense and a great start for Europe's election season. Unlike the voters in the US and the UK, who fell for Donald Trump and the Brexiteers last year, a vast majority of Dutch voters opted for the pro-European mainstream yesterday.

Holger Schmieding Macro Flash Download: :  DUTCH RELIEF: THE IMPACT OF THE VOTE
15.03.2017 FED RAISES RATE, SIGNALS MORE TO COME

The FOMC voted to raise the Federal funds rate by 25 basis points to 0.75%-1.0% and maintain its current policy of reinvesting maturing assets in its portfolio. There was one dissent, by President of the Federal Reserve Bank of Minneapolis, Kashkari, who favored maintaining the existing level of the Fed funds rate. The Fed’s rate hike clearly indicates that the Fed is confident that the economic improvement will be sustained. We welcome such confidence.

Mickey Levy Macro News Download: :  FED RAISES RATE, SIGNALS MORE TO COME
15.03.2017 US: HIGHER INFLATION, OPTIMISTIC SENTIMENT, SPARKLESS ACTIVITY DATA

The economic data continue to reflect better sentiment and an acceleration in inflation, but unimpressive improvement in the activity/“hard” data. The Fed is on track to increase rates at its meeting later today and there is some upside risk on its future policy rate path. Even if activity data remain sluggish, as long as employment and inflation continue to improve at a robust pace, the Fed will be forced to act.

Roiana Reid Macro Flash Download: :  US: HIGHER INFLATION, OPTIMISTIC SENTIMENT, SPARKLESS ACTIVITY DATA
15.03.2017 UK LABOUR MARKET: UNEMPLOYMENT HEADS LOWER WHILE WAGE GROWTH DIPS

Solid labour market in January despite a little disappointment on wage growth. The headline unemployment rate declined to 4.7% in January from 4.8% in December, driven by strong gains in employment (92k 3m/3m). Meanwhile, average weekly earnings growth ex. bonus surprised on the downside, falling to 2.3% yoy from 2.6% yoy in December.

Kallum Pickering Macro Flash Download: :  UK LABOUR MARKET: UNEMPLOYMENT HEADS LOWER WHILE WAGE GROWTH DIPS
14.03.2017 UK: HEADING FOR A HARD BREXIT AND SCOTTISH EXIT?

No strings attached: That parliament has passed the Article 50 bill giving government unconditional permission to kick off the two-year divorce proceedings with the EU is a major victory for Prime Minister Theresa May. 

Sturgeon versus May: SNP leader Nicola Sturgeon has announced that she wants to hold a second referendum on Scottish independence between autumn 2018 and spring 2019. 

Kallum Pickering Macro Flash Download: :  UK: HEADING FOR A HARD BREXIT AND SCOTTISH EXIT?
13.03.2017 UK WEEK AHEAD: ARTICLE 50, LABOUR MARKET, BOE MARCH MEETING

UK Prime Minister Theresa May should have parliamentary approval to trigger Article 50 – the EU divorce notice - by the end of the week.

With the labour market at close to full employment – unemployment below 5% and employment at a record high – job gains are starting to slow. 

The BoE will publish the policy decision and minutes from the March MPC meeting on Thursday at midday.

Kallum Pickering Macro Flash Download: :  UK WEEK AHEAD: ARTICLE 50, LABOUR MARKET, BOE MARCH MEETING
10.03.2017 US: SOLID FEBRUARY JOBS REPORT

US establishments added 235k jobs in February, lowering the unemployment rate to 4.7% and increasing pay for their employees 0.2% m/m, lifting the yr/yr rise to 2.8%. This solid employment report keeps the Fed on track to hike rates at its March meeting, but adds no additional clues on the future path of policy. Two additional hikes in 2017 – in September and December - continue to seem most likely. 

Roiana Reid Macro Flash Download: :  US: SOLID FEBRUARY JOBS REPORT
10.03.2017 UK INDUSTRIAL PRODUCTION: UPTURN CONTINUES DESPITE SMALL DIP IN JANUARY

Two steps forward, one step back - but that’s the way it goes: The little monthly correction in industrial production in January doesn’t change the broad based upward trend. 

Kallum Pickering Macro Flash Download: :  UK INDUSTRIAL PRODUCTION: UPTURN CONTINUES DESPITE SMALL DIP IN JANUARY
09.03.2017 ECB: FIRMER RECOVERY BUT NO NEED TO CHANGE POLICY

On behalf of Holger Schmieding: 

Spring is coming and the ECB is celebrating. The European Central Bank today upgraded its assessment of the economic outlook, attributing the firming recovery and the fading of deflation risks partly to the success of its policies.

Florian Hense Macro Flash Download: :  ECB: FIRMER RECOVERY BUT NO NEED TO CHANGE POLICY
08.03.2017 US: FEBRUARY ADP JOBS REPORT SHOWS OPTIMISM FEEDING THROUGH TO HIRING

ADP/Moody’s estimate that US private payrolls increased by 298k in February, suggesting that the BLS will report similarly strong gains in its monthly jobs report on Friday. Optimistic sentiment is feeding through to hiring with small businesses, manufacturers and construction firms all increasing payrolls at a robust pace in recent months. With labor markets tightening, continued job gains of this magnitude will fuel fears of an overheating economy and force the Fed to hike more than currently expected.

Roiana Reid Macro Flash Download: :  US: FEBRUARY ADP JOBS REPORT SHOWS OPTIMISM FEEDING THROUGH TO HIRING
08.03.2017 UK BUDGET 2017: PUBLIC FINANCES HEADING IN THE RIGHT DIRECTION, BUT LACK EMPHASIS ON INVESTMENT

From a macroeconomic point of view, Budget 2017 provides us with very little to get excited about. Capital spending continues to fall short of what the economy needs as it faces slower long-term growth from Brexit.

Kallum Pickering Macro Flash Download: :  UK BUDGET 2017: PUBLIC FINANCES HEADING IN THE RIGHT DIRECTION, BUT LACK EMPHASIS ON INVESTMENT
06.03.2017 STATUS OF US TAX AND FISCAL REFORM PROPOSALS

Last week I met with numerous Congressional leaders--several Members of Congress plus senior staffers who are integral to developing the tax and fiscal reform proposals and navigating them through the legislative process. In general, I am left with the impression that tax and fiscal reforms will be enacted in 2017, but similar to all tax reform legislation, the process will be contentious and bumpy and there will be modifications to the proposals. 

Mickey Levy Macro News Download: :  STATUS OF US TAX AND FISCAL REFORM PROPOSALS
06.03.2017 UK BUDGET 2017 PREVIEW – POLICY CHANGES UNLIKELY TO ALTER ECONOMIC OUTLOOK

Since 2010 UK fiscal policy has been neither here nor there. The economy is in its 8th year of expansion, yet the cyclical adjusted deficit is still close to 3%.

Kallum Pickering Macro Flash Download: :  UK BUDGET 2017 PREVIEW – POLICY CHANGES UNLIKELY TO ALTER ECONOMIC OUTLOOK
03.03.2017 THE FED: ON THE VERGE OF AN OBVIOUS AND MINOR POLICY MOVE

Federal Reserve Chair Yellen has signaled in a speech she gave today the high probability that the Fed will raise its Fed funds rate target at its upcoming March 14-15 FOMC meeting.  In her detailed assessment of the Fed’s conduct of monetary policy in recent years amid progress toward its dual employment and inflation mandate, perhaps the most insightful and meaningful part of the speech is its title:  “From Adding Accommodation to Scaling It Back”. 

Mickey Levy Macro Views Download: :  THE FED: ON THE VERGE OF AN OBVIOUS AND MINOR POLICY MOVE
02.03.2017 EUROZONE INFLATION HITS 2%, UNDERLYING PRESSURES REMAIN SUBDUED

Mind the gap. It’s the labour market, stupid. The ECB will not have to rethink the thrust of its policies.

Florian Hense Macro Flash Download: :  EUROZONE INFLATION HITS 2%, UNDERLYING PRESSURES REMAIN SUBDUED
01.03.2017 US PCE DEFLATOR ADVANCES 1.9% IN JANUARY PLACING PRESSURE ON FED TO ACT

The Fed’s preferred measure of consumer inflation, the PCE deflator advanced 0.4% m/m and 1.9% yr/yr in January, the highest annual pace since October 2012, putting it right at the Fed’s 2% inflation target. The PCE deflator has made significant progress over the last year (from +1.1% in January 2016 to +1.9% in January 2017) with energy prices finally making a positive contribution (+11.8% in January).

Roiana Reid Macro Flash Download: :  US PCE DEFLATOR ADVANCES 1.9% IN JANUARY PLACING PRESSURE ON FED TO ACT
01.03.2017 UK PMI MANUFACTURING SIGNALS SOLID GROWTH IN FEBRUARY DESPITE SMALL SLIP

A rising tide lifts all boats: The UK manufacturing PMI slipped a little in February to 54.6 (exp. 55) after hitting a two and a half year high in December (55.9). Nonetheless, the data were strong across the board. Output and orders rose solidly as UK producers benefitted from growing demand at home, and critically, from abroad, as new export orders rose for the ninth consecutive month – a signal that the cyclical upturn in global demand is building momentum. The headline number was well above the long-term average of 51.6. The survey reported solid demand for labour and increased capital investment. While input costs remained at a high level, they dipped from the January high. 

Kallum Pickering Macro Flash Download: :  UK PMI MANUFACTURING SIGNALS SOLID GROWTH IN FEBRUARY DESPITE SMALL SLIP
28.02.2017 US: MORE POSITIVE NEWS ON CONSUMER CONFIDENCE, REGIONAL MANUFACTURING

The MNI Chicago Business Barometer, up 7.1pts to 57.4 in February, joined other regional business surveys that showed continued optimistic sentiment this month. The Conference Board consumer confidence index jumped 3.2pts to 114.8 in February – the highest since July 2001. With sentiment continuing to run high for both consumers and businesses, it is important for policy expectations to be met, lest a deterioration in economic activity.

Roiana Reid Macro Flash Download: :  US: MORE POSITIVE NEWS ON CONSUMER CONFIDENCE, REGIONAL MANUFACTURING
28.02.2017 UK UPDATE: SCOTTISH INDEPENDENCE, ARTICLE 50, SOLID NEAR-TERM OUTLOOK

Support for Scottish independence has fallen since the Brexit vote: Could Scotland leave the UK in order to stay in the EU upon Brexit? According to some media reports, PM Theresa May is readying for a possible second Scottish independence referendum.

Kallum Pickering Macro Flash Download: :  UK UPDATE: SCOTTISH INDEPENDENCE, ARTICLE 50, SOLID NEAR-TERM OUTLOOK
28.02.2017 EUROZONE ECONOMIC OUTLOOK: RESILIENT RECOVERY

Forget all the political risks for a moment. Economic fundamentals look quite encouraging for the Eurozone.

Holger Schmieding Macro Views Download: :  EUROZONE ECONOMIC OUTLOOK: RESILIENT RECOVERY
27.02.2017 US: PAUSE IN DURABLE GOODS SECTOR ACTIVITY AT START OF 2017

Beyond the strong 1.8% gain in total durable goods orders, the January report on durable goods was generally weak. Core shipments, which matters for GDP declined in January, outweighing the upward revision to the prior month. Important to not overreact to monthly activity data given high volatility. Moreover, the very optimistic business sentiment suggests a rebound in coming months is more likely than not.

Roiana Reid Macro Flash Download: :  US: PAUSE IN DURABLE GOODS SECTOR ACTIVITY AT START OF 2017
22.02.2017 US: RECAP OF JANUARY-FEBRUARY FOMC MINUTES

The minutes of the January 31st/February 1st FOMC meeting suggested, as Chair Yellen indicated last week, that Fed members will consider a rate increase in upcoming meetings. In response to the slew of strong economic data and the pickup in consumer price inflation, we moved forward our expectation for the next rate hike to March from June. Under the current economic circumstances and strong confidence, delaying a March rate hike would conflict with the Fed’s “data-dependent” policy and damage its credibility.

Mickey Levy, Roiana Reid Macro News Download: :  US: RECAP OF JANUARY-FEBRUARY FOMC MINUTES
22.02.2017 GERMAN IFO: SHRUGGING OFF THE TRUMP EFFECT

The German industry may be concerned, but definitely not scared. When less optimistic expectations weighed on the German Ifo business confidence in January, we alluded to the possibility of a little Trump scare. Today’s reading for February shows that the sharp decline in forward-looking optimism in the previous month was just a blip.

Florian Hense Macro Flash Download: :  GERMAN IFO: SHRUGGING OFF THE TRUMP EFFECT
21.02.2017 EUROZONE PMIS SIGNAL STRONG START TO 2017

More evidence for a strong start into 2017 as activity surges to near six year high: The composite PMI rose to 56.0 in February, after 54.4 in January. The pick-up in activity was driven by record-high levels in both the manufacturing and service sector (70-month and 69-month high, respectively). 

Florian Hense Macro Flash Download: :  EUROZONE PMIS SIGNAL STRONG START TO 2017
20.02.2017 ONE MONTH OF TRUMP: A VIEW FROM ABROAD

It’s Presidents' Day in the US. Reflecting on one month of Trump, Europe is breathing a small sigh of relief: it could have been worse.

Holger Schmieding Macro Flash Download: :  ONE MONTH OF TRUMP: A VIEW FROM ABROAD
20.02.2017 MONDAY MACRO UPDATE: FRENCH, ITALIAN AND GERMAN POLITICS

President Marine Le Pen? The only chance for the anti-EU right-winger to win the French election would be if she would face an equally unelectable candidate in the run-off round on 7 May. Fortunately, this remains unlikely.

Holger Schmieding Macro Flash Download: :  MONDAY MACRO UPDATE: FRENCH, ITALIAN AND GERMAN POLITICS
17.02.2017 UK OUTLOOK RESILIENT: FIRST RATE HIKE IN 2018

Firm growth outlook despite clear risks: The UK economy has carried significant momentum into 2017. The second estimate of Q4 2016 GDP (to be published on 22 February) will likely show that growth accelerated to 0.7% qoq from 0.6% qoq in Q3.

Kallum Pickering Macro Flash Download: :  UK OUTLOOK RESILIENT: FIRST RATE HIKE IN 2018
16.02.2017 ECB MINUTES: STEADY HAND, BUT RISKS MORE BALANCED

After a rather uneventful meeting and press conference on 19 January, reading the tea leaves at the ECB minutes was unlikely to provide materially new information. Still, the minutes did shed some revealing light on the current monetary policy stance of Draghi and his Governing Council colleagues:

1.The ECB may deviate from the capital key when it comes to purchases of sovereign bonds as part of QE

2.Downside risks to economic outlook have receded

 

Florian Hense Macro Flash Download: :  ECB MINUTES: STEADY HAND, BUT RISKS MORE BALANCED
15.02.2017 US DATA UPSIDE SURPRISES AS 2017 UNFOLDS

US economic data on consumer spending, labor markets, consumer and business sentiment, and manufacturing production have been strong in early 2017, setting the stage for a major economic policy regime shift in 2017. The post-election surge in confidence and diminishing headwinds, including the powerful rally in equity markets, seems to be lifting economic activity that had stagnated for such a long time. In addition to establishing a firm basis for the fiscal and regulatory reforms that are now under consideration, these strong data make it exceedingly difficult for the Fed to explain its way out of a March rate hike.

 

Mickey Levy, Roiana Reid Macro News Download: :  US DATA UPSIDE SURPRISES AS 2017 UNFOLDS
14.02.2017 US: FED CHAIR YELLEN’S SEMIANNUAL TESTIMONY TO CONGRESS

Federal Reserve Chair Yellen delivered the Fed’s semiannual monetary policy testimony to Congress today before the Senate Committee on Banking. She will deliver the same testimony before the House Financial Services Committee tomorrow. The testimony reflected a more hawkish tilt from the Fed relative to expectations, as it placed a March rate hike on the table. This testimony follows more hawkish comments from other Fed presidents recently (Williams and Harker) that a March rate hike should be considered.

Roiana Reid Macro News Download: :  US: FED CHAIR YELLEN’S SEMIANNUAL TESTIMONY TO CONGRESS
14.02.2017 EUROZONE MACRO UPDATE: GROWTH AT TREND, OUTLOOK REMAINS POSITIVE

Eurozone Q4 GDP (2nd reading) – encouraging, broad-based growth at trend
German Q4 GDP (1st reading) – growth accelerates to 0.4% qoq, outlook solid
German ZEW – sentiment softer, but at high level
Italian Q4 GDP (1st reading) – sluggish growth, political uncertainty weighs on consumption

Florian Hense Macro Flash Download: :  EUROZONE MACRO UPDATE: GROWTH AT TREND, OUTLOOK REMAINS POSITIVE
13.02.2017 UK MACRO: ARTICLE 50, DATA FOR THE WEEK AHEAD

After the prime minister easily won approval – without any amendments - from the House of Commons (lower house) to trigger Brexit by invoking Article 50 of the EU treaties, it seems unlikely that the unelected House of Lords (upper house) will introduce any significant changes to the bill that will enable the government to kick-off Brexit negotiations with the EU27. The House of Lords is set to debate the bill from 20 February onwards.

Kallum Pickering Macro Flash Download: :  UK MACRO: ARTICLE 50, DATA FOR THE WEEK AHEAD
06.02.2017 US: HIGH CONFIDENCE LIFTS ECONOMY AND OUTLOOK

Post-election confidence surveys have remained strong in early 2017, supporting expectations of accelerating economic growth. The better sentiment seems to be feeding into the economy – strong December durable goods report and robust job gains in January. There are a lot of moving parts in the fiscal reform proposals, but expect the tax reform package to be introduced in Spring, debated and modified and enacted by late summer.

Mickey Levy, Roiana Reid Macro Views Download: :  US: HIGH CONFIDENCE LIFTS ECONOMY AND OUTLOOK
06.02.2017 EUROPEAN POLITICAL UPDATE: MERKEL, MACRON, RENZI

The economy is on the right track. We just raised our 2017 growth forecast for the Eurozone from 1.5% to 1.7%. Amid resilient economic growth, we need to watch the politics even more closely than usual this year. 

Holger Schmieding Macro Flash Download: :  EUROPEAN POLITICAL UPDATE: MERKEL, MACRON, RENZI
03.02.2017 US: STRONG JOB GROWTH AND DATA SHOULD ENCOURAGE FED TO CONSIDER MARCH HIKE

US nonfarm payrolls increased 227k in January, growing above its recent trend (nonfarm payroll growth averaged 148k in Q4), as the recent surge in sentiment appears to be feeding through to economic activity and hiring. The unemployment rate ticked up 0.1pp to 4.8%, rising for the right reason – an increase in the labor force participation rate. On the flip side, average hourly earnings disappointed in January, growing by a slight 0.1% m/m, placing the yr/yr gain lower at 2.5%.

Roiana Reid Macro Flash Download: :  US: STRONG JOB GROWTH AND DATA SHOULD ENCOURAGE FED TO CONSIDER MARCH HIKE
02.02.2017 UK: BOE AT RISK OF FALLING BEHIND THE CURVE AFTER MAJOR UPGRADES TO GROWTH OUTLOOK

The Bank of England (BoE) is running the risk of falling behind the curve. The sharp falls in survey measures of economic activity immediately after the Brexit vote provided a strong and valid case for a monetary ease last August. But circumstances can change.

Kallum Pickering Macro Flash Download: :  UK: BOE AT RISK OF FALLING BEHIND THE CURVE AFTER MAJOR UPGRADES TO GROWTH OUTLOOK
02.02.2017 US: FOMC LEAVES POLICY UNCHANGED BUT APPEARS MORE CONFIDENT IN OUTLOOK

As expected, the FOMC voted to leave the federal funds rate target unchanged at its January 31-February 1 meeting. There were no material changes made to the Fed’s official Policy Statement, but the Committee indicated more confidence in its economic outlook.

Roiana Reid Macro News Download: :  US: FOMC LEAVES POLICY UNCHANGED BUT APPEARS MORE CONFIDENT IN OUTLOOK
01.02.2017 UK: BOE INFLATION REPORT PREVIEW - EARLY SIGNS OF HAWKISHNESS?

With some words of Brexit-related caution, the Bank of England (BoE) may surprise with a more hawkish tone at tomorrow’s Inflation Report as it revises up its near-term growth forecast and highlights growing underlying inflationary risks.

Kallum Pickering Macro Flash Download: :  UK: BOE INFLATION REPORT PREVIEW - EARLY SIGNS OF HAWKISHNESS?
01.02.2017 UK: BOE INFLATION REPORT PREVIEW - EARLY SIGNS OF HAWKISHNESS?

With some words of Brexit-related caution, the Bank of England (BoE) may surprise with a more hawkish tone at tomorrow’s Inflation Report as it revises up its near-term growth forecast and highlights growing underlying inflationary risks.

Kallum Pickering Macro Flash Download: :  UK: BOE INFLATION REPORT PREVIEW - EARLY SIGNS OF HAWKISHNESS?
01.02.2017 FRENCH ELECTION UPDATE

In politics, the road is rarely smooth. The investigation of presidential candidate François Fillon (Republican) following allegations of false employment of his family could alter the calculus of the French presidential elections on 23 April and 7 May.

Kallum Pickering Macro Views Download: :  FRENCH ELECTION UPDATE
31.01.2017 EUROZONE MACRO UPDATE: ENCOURAGING ACROSS THE BENCH

Economic fundamentals are encouraging, output is expanding at around trend, labour market continues to improve and core inflation will follow suit, but remains well below target.

Florian Hense Macro Flash Download: :  EUROZONE MACRO UPDATE: ENCOURAGING ACROSS THE BENCH
31.01.2017 US: FED’S PREFERRED MEASURE OF WAGES IMPROVED ONLY SLIGHTLY IN 2016

The US Employment Cost Index (ECI), a quarterly measure of wage compensation favored by the Fed, advanced 2.2% in 2016, barely above the 2.1% gain registered in both 2014 and 2015. The strong ECI gains were concentrated in mainly low-paying and less-productive jobs. The continued modest gains in the ECI support the Fed’s perception that it can take its time in normalizing monetary policy. However, anticipate that fiscal policy reforms and stronger economic growth raise the risk that the Fed falls behind the curve.

Roiana Reid Macro Flash Download: :  US: FED’S PREFERRED MEASURE OF WAGES IMPROVED ONLY SLIGHTLY IN 2016
30.01.2017 US CONSUMERS GAINING CONFIDENCE IN FINANCES, ENERGY FINALLY BOOSTING PRICES

US nominal private consumption rose 0.5%m/m in December, outpacing the 0.3%m/m rise in personal income. The almost two-year low in the personal saving rate is consistent with growing consumer confidence. PCE inflation rose 1.6% yr/yr in December 2016, a full percentage point higher than its 0.6% yr/yr rise in December 2015 likely enabling the Fed to proceed with its rate normalization.

Roiana Reid Macro Flash Download: :  US CONSUMERS GAINING CONFIDENCE IN FINANCES, ENERGY FINALLY BOOSTING PRICES
27.01.2017 US DURABLE GOODS SECTOR FINALLY ESCAPING SLUMP

The December durable goods report suggests improved business sentiment may be already feeding through to better capital spending. The durable goods sector stands to be one of the sectors that will benefit most from proposed fiscal reform. An acceleration in business investment is central to our forecast for a pickup in economic growth.

Roiana Reid Macro Flash Download: :  US DURABLE GOODS SECTOR FINALLY ESCAPING SLUMP
26.01.2017 US: HIGHER RATES LIKELY TO HURT HOUSING IN FIRST HALF OF 2017

Despite declines in sales of new and existing homes in December, residential fixed investment likely rebounded in Q4 after falling in the prior two quarters. This strong rebound may be somewhat short-lived due to the approximate 60bp jump in US mortgage interest rates since the US elections. Pick up in wage growth and a stronger economy should counter the negative impact from higher rates in the medium term.

Roiana Reid Macro Flash Download: :  US: HIGHER RATES LIKELY TO HURT HOUSING IN FIRST HALF OF 2017
26.01.2017 What Brexit? UK sustained above trend growth in Q4, driven by strong growth in services

Brexit did not have a major effect on the UK economy in 2016. After growing a little above trend in the middle of the year (0.6% qoq in Q2 and Q3), the quarterly growth rate remained stable in Q4 (0.6% qoq). Looking at 2016 overall, the January sell-off in markets on the back of fears for global growth hurt the expansion at the start of the year (0.3% qoq in Q1). But beginning in Q2, and despite the June 23 Brexit vote, the economy performed strongly in the final three quarters of the year. On an annual basis, the UK economy expanded by 2.0% in 2016, slowing a little from 2.2% in 2015. 

Kallum Pickering Download: :  What Brexit? UK sustained above trend growth in Q4, driven by strong growth in services
25.01.2017 EARLY ELECTIONS IN ITALY?

Italian politics poses the biggest single tail risk to the stability of the Eurozone in 2017, as it did in the second half of last year.

Holger Schmieding Macro Flash Download: :  EARLY ELECTIONS IN ITALY?
25.01.2017 GERMAN IFO SETBACK: A LITTLE TRUMP SCARE?

Is Trump scaring German industry? Driven by less optimistic expectations, German Ifo business confidence fell back in January following a strong surge late last year.

Holger Schmieding Macro Flash Download: :  GERMAN IFO SETBACK: A LITTLE TRUMP SCARE?
24.01.2017 EUROZONE PMIS SIGNAL SOLID START TO 2017

Getting off to a good start: PMIs for the Eurozone and its major economies remained stable at a high level at the start of the year after strong gains in recent months.

Florian Hense Macro Flash Download: :  EUROZONE PMIS SIGNAL SOLID START TO 2017
24.01.2017 GERMAN POLITICS: A CENTRE-LEFT ALTERNATIVE TO MERKEL?

Merkel at risk? Germany’s major centre-left party SPD has started the campaign for the 24 September federal election with a sort-of surprise.

Holger Schmieding Macro Flash Download: :  GERMAN POLITICS: A CENTRE-LEFT ALTERNATIVE TO MERKEL?
24.01.2017 SUPREME COURT BACKS PARLIAMENTARY VOTE - HARD BREXIT RISK FALLS

Supreme Court ruling nudges the Brexit pendulum slightly towards a softer Brexit. Since a majority of MPs are pro-EU, anything that raises the influence of parliament on the Brexit process boosts the prospects of a less hard exit from the EU. Today’s 8-3 vote by the 11 Supreme Court judges, backing the High Court ruling that parliament must take a vote on triggering Article 50, is a positive for the long-term UK economic outlook. By damaging trade, migration and investment with the EU, its biggest market, Brexit will reduce the UK’s long run potential growth rate to 1.8% pa from its current rate of 2.2% in our base case. Today’s judgement tilts the risk to our long-term outlook a little to the upside. The Supreme Court also ruled that government will not need the assent of the devolved parliaments of Scotland, Wales and N. Ireland before triggering Article 50. 

Kallum Pickering Macro Flash Download: :  SUPREME COURT BACKS PARLIAMENTARY VOTE - HARD BREXIT RISK FALLS
23.01.2017 MONDAY MACRO UPDATE: TRUMP, BREXIT, FRENCH AND ITALIAN POLITICS

TRUMP: A DIVISIVE START
UK: SUPREME COURT RULING, MAY MEETS TRUMP
FRANCE: ADVANTAGE MACRON?
ITALY: MIND THE COURT

Holger Schmieding Macro Flash Download: :  MONDAY MACRO UPDATE: TRUMP, BREXIT, FRENCH AND ITALIAN POLITICS
20.01.2017 UK RETAIL SALES: SOLID TREND DESPITE DECEMBER CORRECTION

THE CONSUMER IS KING

UK consumers are enjoying life, helping the economy to cope with the Brexit shock. Unfortunately, this may not last much longer. The solid growth in retail sales of 1.4% qoq in Q4 (1.9% qoq in Q3) suggests the UK economy ended 2016 on a stable footing. The ten year average quarterly growth rate is 0.5%. Retail sales provide the timeliest official indicator of household demand and spending which makes up two-thirds of GDP.  The modest slowdown in the quarterly growth rate supports our call that GDP growth slowed to around its trend rate of 0.5% qoq in the final quarter of last year from 0.6% qoq in the third quarter. The first estimate of Q4 GDP will be published next Thursday. 

Kallum Pickering Macro Flash Download: :  UK RETAIL SALES: SOLID TREND DESPITE DECEMBER CORRECTION
19.01.2017 US REGIONAL MANUFACTURING OPTIMISM CONTINUES INTO 2017

The post-election surge in sentiment is proving to be more than ephemeral, with euphoria continuing into 2017. The Philadelphia Fed headline manufacturing index, one of the earliest measures of business sentiment on the month, advanced almost 4 points to 23.6 in January.

 

Roiana Reid Macro Flash Download: :  US REGIONAL MANUFACTURING OPTIMISM CONTINUES INTO 2017
19.01.2017 ECB: STEADY AS SHE GOES

No change, no news. Upon leaving all interest rates and the key parameters of its asset purchase programme unchanged, the ECB did not signal any need to rethink its policy soon.

Holger Schmieding Macro Flash Download: :  ECB: STEADY AS SHE GOES
19.01.2017 PRESIDENT TRUMP - A VIEW FROM ABROAD

The world is entering a period of heightened opportunities and risks. On balance, we expect the switch from political gridlock between the US Congress and the White House to results-oriented co-operation between a Republican majority in Congress and a Republican US President to yield serious pro-growth reforms that will outweigh the damage which Donald Trump’s protectionist inclinations, his “rule by Twitter” and his other unconventional traits may do.

Holger Schmieding Macro Flash Download: :  PRESIDENT TRUMP - A VIEW FROM ABROAD
18.01.2017 US IP FALTERED IN 2016 BUT REFORM LIKELY TO CAUSE TURNAROUND IN COMING YEARS

US industrial production ended 2016 on a positive note, posting its first yr/yr gain since August 2015. However, details suggest that underlying manufacturing demand is still weak and that it will take some time for better sentiment to feed through to actual activity. Pro-business fiscal reform and higher energy prices should lead to a rebound in industrial production in 2017.

Roiana Reid Macro Flash Download: :  US IP FALTERED IN 2016 BUT REFORM LIKELY TO CAUSE TURNAROUND IN COMING YEARS
18.01.2017 US: PICK UP IN ENERGY PRICES PUSHES HEADLINE CPI UP TO CORE CPI AT END OF 2016

The US headline Consumer Price Index (CPI) rose 2.1% yr/yr in December, climbing closer to the core CPI (excludes food and energy) as the drag from energy prices has diminished. Rents and medical care service prices pushed up core inflation in 2016. If the anticipated fiscal reforms generate an acceleration in economic growth, businesses will have greater pricing power, and wages will accelerate. The Fed will be on the lookout.

Roiana Reid Macro Flash Download: :  US: PICK UP IN ENERGY PRICES PUSHES HEADLINE CPI UP TO CORE CPI AT END OF 2016
18.01.2017 UK: SIGNS POINT TO FULL EMPLOYMENT AS WAGE GROWTH ACCELERATES

Despite Brexit the UK labour market has remained strong so far. Headline unemployment remained unchanged in November at 4.8% while average weekly earnings growth ex. bonus accelerated to 2.7% yoy from 2.6% yoy in October. Total wages (incl. bonus) rose 2.8% yoy versus the consensus expectation of 2.6% yoy. Unemployment has not been lower since 2005. On a 3-month/3-month basis employment fell by less than expected, just 9k (exp. 35k) after declining 6k in October. Indicators available for the month of December, which give a good idea of where the main series are heading, show that the UK labour market finished 2016 on a strong footing. The December claimant count rate remained unchanged at 2.3% as jobless claims declined by 10.1k.  Vacancies in December held firm at 748k, close to an all time high.

Kallum Pickering Macro Flash Download: :  UK: SIGNS POINT TO FULL EMPLOYMENT AS WAGE GROWTH ACCELERATES
17.01.2017 ECONOMIC IMPLICATIONS OF MAY'S SPEECH: CRUCIAL DETAILS STILL UNKNOWN

Besides offering a roundup of May and her Conservative government’s broad ambitions for Brexit, most of which had been leaked or announced much earlier, we learned nothing new today that adds any colour to our economic outlook for Brexit. Critical details on the government’s intended future rules for migration, or its ambitions for the length and nature of a transitional agreement for Brexit, are still missing. Such details are crucial in order to better estimate the level of access the UK will get to the EU market – think single market-migration trade-off – and the long terms consequences of Brexit.

Kallum Pickering Macro Flash Download: :  ECONOMIC IMPLICATIONS OF MAY'S SPEECH: CRUCIAL DETAILS STILL UNKNOWN
17.01.2017 BREXIT BASICS

Brexit will do some significant damage to the British economy. Greater London is the services capital of Europe. Today, companies take advantage of the great conveniences of Britain's light-touch regulation, its competent administration, its deep pool of qualified labour and the English language to offer their services across Europe from a British base.

Holger Schmieding Macro Views Download: :  BREXIT BASICS
17.01.2017 BREXIT BASICS

Brexit will do some significant damage to the British economy. Greater London is the services capital of Europe. Today, companies take advantage of the great conveniences of Britain's light-touch regulation, its competent administration, its deep pool of qualified labour and the English language to offer their services across Europe from a British base.

Holger Schmieding Macro Views Download: :  BREXIT BASICS
16.01.2017 UK macro: the week ahead

THERESA MAY SPEAKS ON BREXIT STRATEGY – VEERING TOWARD A HARD(ISH) BREXIT (TUESDAY 17TH JANUARY)

 

INFLATION – UP, UP, AND AWAY (TUESDAY 17TH JANUARY)

 

LABOUR MARKET – STILL GOING STRONG (WEDNESDAY 18TH JANUARY)

 

RETAIL SALES – HOW LONG CAN THE UPTURN IN CONSUMER SPENDING BE SUSTAINED? (FRIDAY 20TH JANUARY)

Kallum Pickering Macro Flash Download: :  UK macro: the week ahead
13.01.2017 US DECEMBER RETAIL SALES EX-AUTOS TILT SOFT, BUT FUTURE LOOKS BRIGHT

Total US retail sales ended the year at a fast pace, advancing 0.6% m/m in December, driven by motor vehicles and parts, elsewhere sales tilted soft with control retail sales up only 0.2% m/m. Holiday shopping season was likely strong, with nonstore retail sales (includes online sales) up a strong 1.3% m/m and up 12% qtr/qtr (annualized). Future household consumption is setting up to be robust with likely cuts in individual income tax rates and improving consumer fundamentals.

Roiana Reid Macro Flash Download: :  US DECEMBER RETAIL SALES EX-AUTOS TILT SOFT, BUT FUTURE LOOKS BRIGHT
12.01.2017 ECB DECEMBER MINUTES INDICATE DIVISION AND UNCERTAINTY FOR ROAD AHEAD

The minutes of the December Governing Council meeting suggest a shift in the ECB’s assessment of the balance of risks. The shift led the ECB to send a balanced message of continued support for longer, at a reduced amount. As Draghi had stressed already in the press conference following the monetary policy decision there was no discussion of tapering.

Florian Hense Macro Flash Download: :  ECB DECEMBER MINUTES INDICATE DIVISION AND UNCERTAINTY FOR ROAD AHEAD
10.01.2017 EUROPEAN POLITICAL UPDATE

Germany remains stable, France presents an opportunity, Italy poses a risk. The evidence so far this year strengthens some key conclusions of our Global outlook 2017: more growth, more risks.

Holger Schmieding Macro Views Download: :  EUROPEAN POLITICAL UPDATE
06.01.2017 US DECEMBER JOBS REPORT SOLID ON ALL FRONTS

The Employment Report for December was solid.  New job gains slowed to 156k in December, below its recent average, but there were net upward revisions to previous months. Average wages jumped 0.4%, lifting its yr/yr rise to 2.9%. While the unemployment rate ticked up to 4.7%, partially reversing its prior decline, the unemployment rate remains near its natural rate. 

Roiana Reid Macro Flash Download: :  US DECEMBER JOBS REPORT SOLID ON ALL FRONTS
06.01.2017 HAPPY NEW YEAR: EUROZONE SENTIMENT SURGES TO POST-CRISIS RECORD - BERENBERG MACRO FLASH

The Eurozone is on course for a solid start into 2017 after a robust finish to 2016. Supported by resilient domestic demand, ongoing gains in employment and an improving export outlook, economic sentiment in the Eurozone surged to its strongest level since March 2011 in December, reaching 107.8 after 106.6 in November.

Holger Schmieding Macro Flash Download: :  HAPPY NEW YEAR: EUROZONE SENTIMENT SURGES TO POST-CRISIS RECORD - BERENBERG MACRO FLASH
06.01.2017 UPTURN IN GERMAN MANUFACTURING DESPITE NOVEMBER CORRECTION OF FACTORY ORDERS

No reason to worry about the German industrial sector. A monthly decline of 2.5% in factory orders in No-vember partially corrects the previous month’s outlier when orders surged by a revised 5.0%.

Florian Hense Macro Flash Download: :  UPTURN IN GERMAN MANUFACTURING DESPITE NOVEMBER CORRECTION OF FACTORY ORDERS
04.01.2017 DECEMBER FOMC MINUTES STRESS UNCERTAINTY ABOUT OUTLOOK

The minutes of the December FOMC meeting suggest clearly that Fed members are thinking about impending fiscal policy changes, but the FOMC’s median forecast of real GDP and the unemployment rate barely nudged over the projection period. However, at the same time, the median forecast of the appropriate Federal funds rate for end-2017 rose to 1.4% from 1.1%, implying a 3rd rate increase during the year.

Roiana Reid Macro News Download: :  DECEMBER FOMC MINUTES STRESS UNCERTAINTY ABOUT OUTLOOK
19.12.2016 GERMAN ECONOMY IN FESTIVE MOOD, AND IT’S HERE TO STAY

Christmas is coming and Germany has good reasons to crack a bottle of champagne on New Year’s Eve.

Florian Hense Macro Flash Download: :  GERMAN ECONOMY IN FESTIVE MOOD, AND IT’S HERE TO STAY
16.12.2016 US HOUSING MALAISE TO CONTINUE EARLY NEXT YEAR WITH JUMP IN RATES

Housing starts declined 19% to an annualized 1090k in November, continuing on the extreme volatility of the last few months due to swings in the multifamily sector. Looking past these recent swings, the six-month moving average of housing starts is 1177k, only slightly better than a year ago as starts have moved sideways over the last year. The housing market has disappointed in 2016, but it is still well below potential with plenty of room for improvement.

Roiana Reid Macro Flash Download: :  US HOUSING MALAISE TO CONTINUE EARLY NEXT YEAR WITH JUMP IN RATES
15.12.2016 US ENERGY AND RENTS PUSHING UP CONSUMER PRICES

The US CPI advanced 1.7% yr/yr in November, an acceleration from October as energy prices contributed positively to year-on-year growth for the second consecutive month. The gap between core CPI and the Fed’s preferred measure of inflation, core PCE deflator, has narrowed after widening for more than a year due to an acceleration in healthcare prices this year. The likely large fiscal stimulus package expected to be proposed by the Trump Administration and enacted by Congress is expected to boost economic growth and put upward pressure on inflation.

Roiana Reid Macro Flash Download: :  US ENERGY AND RENTS PUSHING UP CONSUMER PRICES
15.12.2016 UK: MPC December minutes: BoE in neutral

With the economy currently expanding at around its trend rate, the labour market solid and inflation remaining low – for now – there wasn’t much for the Bank of England’s Monetary Policy Committee to really grip onto at the December meeting.

Kallum Pickering Download: :  UK: MPC December minutes: BoE in neutral
14.12.2016 THE FED: SO WHAT’S NEXT?

As we described in our pre-FOMC note, the Fed raised its Federal funds rate target, but the FOMC members made virtually no changes to their economic or inflation forecasts.  The median FOMC member’s estimate of the appropriate Fed funds rate (the so-called “dots”) at year-end 2017 was raised to 1.4% from 1.1%, suggesting three rate increases in 2017, and raised to 2.1% from 1.9% the 2018 year-end Fed funds rate. 

Mickey Levy Macro Views Download: :  THE FED: SO WHAT’S NEXT?
14.12.2016 WARM NOVEMBER WEIGHS ON US IP MASKING MODESTLY IMPROVING FACTORY ACTIVITY

US industrial production declined 0.4% m/m (-0.7% yr/yr) in November primarily due to a drop in utilities production as warmer-than-usual weather reduced heating demand. Elsewhere, signs of better underlying trend in production with 15 of 23 industries recording increases from three months ago, a significant rise from less than half in prior months. Mining production has turned around and the recent surge in oil prices will continue to fuel activity in the sector.

Roiana Reid Macro Flash Download: :  WARM NOVEMBER WEIGHS ON US IP MASKING MODESTLY IMPROVING FACTORY ACTIVITY
14.12.2016 US RETAIL ACTIVITY SLOW IN NOVEMBER BUT LIKELY SOLID FOR Q4 ON THE WHOLE

US retail sales advanced only 0.1% m/m in November, but are still on pace to increase over 5% annualized in Q4. Nonstore retail sales (includes online shopping) were weaker than expected, posting a slight 0.1% m/m gain, but followed a strong gain in October and still up 12% on the year. Optimistic consumer sentiment and the rally in equity markets should support activity going forward.

Roiana Reid Macro Flash Download: :  US RETAIL ACTIVITY SLOW IN NOVEMBER BUT LIKELY SOLID FOR Q4 ON THE WHOLE
13.12.2016 UK UPDATE: INFLATION REACHES HIGHEST LEVEL IN TWO YEARS

Headline inflation rose to 1.2% in November, in line with expectations and up from 0.9% in October. Core inflation, which excludes volatile energy and food prices, rose to 1.4% from 1.2% the previous month. 

 

Today’s data show building inflationary pressure following the large Brexit-related depreciation in trade-weighted sterling. We anticipate a continued rise in inflation over the coming months, peaking at 2.8% in Q3 2017 before gradually declining thereafter.

Kallum Pickering Download: :  UK UPDATE: INFLATION REACHES HIGHEST LEVEL IN TWO YEARS
12.12.2016 FED TO HIKE BUT NOT CHANGE FORECASTS AT DECEMBER MEETING

The Fed will raise its target Fed funds rate at this week’s FOMC meeting, but the Fed is not expected to materially alter either its economic forecasts or its forecasts of the trajectory of the appropriate Fed funds rate (the “dots”) in its quarterly forecasting updates, even though the Fed clearly senses an economic regime shift under President-elect Trump. 

 

Mickey Levy Macro Views Download: :  FED TO HIKE BUT NOT CHANGE FORECASTS AT DECEMBER MEETING
12.12.2016 UK MACRO UPDATE: SUMMARY OF THE DATA FOR THE WEEK AHEAD

A key week ahead: Data on inflation, the labour market and retail sales, in addition to the release of the minutes from the BoE’s December meeting will be published over the next few days. We provide a brief overview on what to look out for. 

Kallum Pickering Download: :  UK MACRO UPDATE: SUMMARY OF THE DATA FOR THE WEEK AHEAD
12.12.2016 MONDAY MACRO UPDATE: ITALIAN POLITICS, GERMAN ECONOMY

Italy is trying to defuse its political crisis fast. After Renzi’s failed referendum eight days ago, the likely solution for the time being seems to be to carry on largely as before, just with Renzi exerting control from a back rather than the front seat.

Holger Schmieding Macro Views Download: :  MONDAY MACRO UPDATE: ITALIAN POLITICS, GERMAN ECONOMY
08.12.2016 US HOUSEHOLD FINANCES IN DECENT SHAPE

The Federal Reserve released its quarterly report on the Financial Accounts (Flow of Funds) of the US today. The finances of households and nonprofit organizations for Q3 were much improved, with household net worth increasing $1.5 trillion to $90 trillion. After decelerating (year-on-year) for several quarters, growth in the total value of financial assets held by households accelerated in both Q2 and Q3. The acceleration in home prices put the value of real estate up 7.2% yr/yr in Q3.

Roiana Reid Macro News Download: :  US HOUSEHOLD FINANCES IN DECENT SHAPE
08.12.2016 ECB: TAPERING AIN'T THE WORD FOR IT

Tapering is not the right word for it. Trying to avoid a taper tantrum, the ECB found a different way to start scaling back its asset purchases than the Fed had done three years ago.

Holger Schmieding Macro Flash Download: :  ECB: TAPERING AIN'T THE WORD FOR IT
07.12.2016 Upturn in UK industrial production hits a bump in the road - weak sterling is double-edged sword

The cyclical upturn in UK industrial production stalled again in October.

Industrial production – circa 15% of GDP – unexpectedly declined by 1.3% mom compared to consensus expectations of growth of 0.2%. That followed a contraction of 0.4% in September. On a 3m/3m basis industrial production declined by 0.9%. Monthly data are volatile and should be interpreted with caution. There were a few temporary factors that played a significant part in the sharp downturn. 

 

Kallum Pickering Macro Flash Download: :  Upturn in UK industrial production hits a bump in the road - weak sterling is double-edged sword
07.12.2016 MACRO UPDATE: ECB PREVIEW, ITALY

Expect the European Central Bank to send a two-pronged message this Thursday. First, The ECB wants to maintain a highly accommodative stance.

Holger Schmieding Macro Views Download: :  MACRO UPDATE: ECB PREVIEW, ITALY
06.12.2016 US NET EXPORTS LIKELY TO DRAG ON Q4 GDP BUT DOMESTIC DEMAND IS FIRM

The US international trade balance widened to -$42.6bn in October, largely reversing the narrowing to -$36.2bn in September. The widening was partly due to a drop in soybean exports which surged in Q3. The net export deficit looks to widen in Q4 and subtract form domestic production, but measures of domestic demand look solid in Q4.

Roiana Reid Macro News Download: :  US NET EXPORTS LIKELY TO DRAG ON Q4 GDP BUT DOMESTIC DEMAND IS FIRM
05.12.2016 AUSTRIA: NO RIGHT-WING PRESIDENT

Not all risks materialise: in a repeat election for the ceremonial post of president, Austrians rejected the ultra-right candidate Norbert Hofer, choosing the pro-European Alexander Van der Bellen with 52% to 48% instead.

Holger Schmieding Macro Flash Download: :  AUSTRIA: NO RIGHT-WING PRESIDENT
05.12.2016 RENZI RESIGNS: ITALIAN RISKS AFTER THE "NO"

Brexit, Trump, Italy. For the third time within six months, a major political risk has materialised as Italian voters rejected Renzi's constitutional reform by roughly 60% to 40%.

Holger Schmieding Macro Flash Download: :  RENZI RESIGNS: ITALIAN RISKS AFTER THE "NO"
02.12.2016 US NOVEMBER JOBS REPORT MIXED BUT LIKELY ENOUGH FOR FED HIKE THIS MONTH

The November US employment report was mixed, but likely enough for the FOMC to hike at its December 13-14 meeting. Total US nonfarm payrolls increased a solid 178k into November (+1.6% yr/yr), in line with the Consensus forecast. Total personal incomes likely grew at a slower pace in November, as average hourly earnings fell 0.1% m/m and aggregate hours worked advanced by a slight 0.1% m/m. The household survey revealed a sizable 0.3pp decline in the unemployment rate to 4.6% which fell partly for the “wrong” reason as the labor force participation rate ticked down 0.1pp to 62.7%. Still, the decline in unemployment rate is impressive as the level of unemployment fell 387k and household employment increased 160k.

Roiana Reid Macro Flash Download: :  US NOVEMBER JOBS REPORT MIXED BUT LIKELY ENOUGH FOR FED HIKE THIS MONTH
30.11.2016 US: SLUGGISH GAINS IN OCTOBER PRIVATE CONSUMPTION LIKELY TEMPORARY

US real private consumption moderated to a slight 0.1% gain in October after a robust finish to Q3. The slowdown was due to anomalous drop in services spending, fundamentals point to a solid rebound in coming months. Over the medium term, expectations for personal consumption have been revised up moderately due to likely cuts in marginal income tax rates. The 1.74% yr/yr increase in the core PCE deflator is enough for the Fed to increase rates at its December meeting.

Mickey Levy Macro Flash Download: :  US: SLUGGISH GAINS IN OCTOBER PRIVATE CONSUMPTION LIKELY TEMPORARY
29.11.2016 RENZI'S REFERENDUM: NOTES ON THE THE ITALIAN RISK

Ever since the Brexit vote, we have viewed a potential political crisis in Italy as the top event risk in Europe for 2017. ‎

Holger Schmieding Macro Views Download: :  RENZI'S REFERENDUM: NOTES ON THE THE ITALIAN RISK
28.11.2016 MONDAY MACRO UPDATE: FILLON, MERKEL, BREXIT

After winning the Republican primaries convincingly with two thirds of the vote, Francois Fillon is in the pole position to be the next French president.

Holger Schmieding Macro Views Download: :  MONDAY MACRO UPDATE: FILLON, MERKEL, BREXIT
25.11.2016 UK Q3 GDP - GROWING AT TREND DESPITE BREXIT UNCERTAINTY

Good fundamentals carry the UK through Q3 unscathed by the Brexit-vote. The economy expanded by 0.5% qoq in Q3 - in line with trend - according to the second estimate of GDP. This followed an above-trend expansion of 0.7% in Q2. Third quarter growth was driven by a continued solid expansion in domestic demand and a better-than-expected positive contribution from the trade balance.

Kallum Pickering Download: :  UK Q3 GDP - GROWING AT TREND DESPITE BREXIT UNCERTAINTY
23.11.2016 FOMC MINUTES REAFFIRM EXPECTATIONS FOR DECEMBER HIKE

The minutes to the November FOMC meeting reaffirmed expectations of an increase in the target federal funds rate in December. Most participants believed an increase was appropriate “relatively soon” and some participants believed that a hike was important to maintain credibility. Several dovish FOMC members argued to let the labor market overheat for some time in order to push inflation towards the Committee’s 2% goal.

Mickey Levy Macro News Download: :  FOMC MINUTES REAFFIRM EXPECTATIONS FOR DECEMBER HIKE
23.11.2016 AUTUMN STATEMENT – NOTHING TO GET EXCITED ABOUT

With no immediate economic crisis to deal with, Chancellor Hammond announced today at the Autumn Statement that he will continue – albeit even more slowly – with the process of fiscal consolidation set in motion by his predecessor George Osborne. Having scrapped Osborne’s target of achieving a headline surplus by 2019-20, and in keeping with all modern Chancellors, today Hammond revised the governments fiscal targets, again. The new easier-to-achieve Fiscal Charter mandates the government to reduce the cyclically adjusted budget deficit to less than 2% by 2020-21. This might prove useful as the OBR’s forecasts for long-term growth look generous, to put it mildly. 

 

Overall, today’s announcements are pointing in the right direction; a more gradual consolidation of fiscal spending with a focus on long-term productivity boosting measures such as R&D and infrastructure in addition to income tax cuts to help buffer households against rising inflation. Unfortunately, with little wiggle room after the downward revisions to growth, the announced total spending will not have a major impact on the growth outlook. The bottom line is this, instead of saving the British taxpayer hundreds of millions of pounds per week as argued by the Leave Campaign, Brexit looks set to cost them £122bn over 5 years. 

 

Kallum Pickering Download: :  AUTUMN STATEMENT – NOTHING TO GET EXCITED ABOUT
22.11.2016 US OCTOBER EXISTING HOME SALES STRONG BUT HIGHER RATES POSES DOWNSIDE RISKS

US existing home sales advanced 2% m/m in October to an annualized 5.6mn, well above the Consensus forecast (5.44mn) and the highest pace since February 2007. The recent jump in mortgage interest rates could lead to a surge in home buying activity followed by subsequent declines. Despite the almost 50bp jump in mortgage rates over the last couple of weeks, they remain historically low around 4% so impact on activity may not be large or persistent.

Mickey Levy Macro Flash Download: :  US OCTOBER EXISTING HOME SALES STRONG BUT HIGHER RATES POSES DOWNSIDE RISKS
21.11.2016 POLITICAL UPDATE: ADVANTAGE FILLON, MERKEL RUNS AGAIN

Good news for Europe. The risk that a widespread yearning for change in France could sweep far-right Marine Le Pen to power next year has receded a little further. Instead, chances are that France may finally get some overdue economic reforms under a centre-right president. Following a late surge in support, ex-prime minister Francois Fillon has won the first round of the centre-right primaries.

Ending months of nagging uncertainty, German chancellor Angela Merkel confirmed this evening that she will seek a fourth term at the national election in September 2017. No surprise. While she had kept observers guessing, Berlin has worked for weeks on the assumption that she would run again. According to Merkel, the decision was “far from trivial” for her. 

 

Holger Schmieding Macro Flash Download: :  POLITICAL UPDATE: ADVANTAGE FILLON, MERKEL RUNS AGAIN
18.11.2016 UK FISCAL POLICY: AUTUMN STATEMENT COULD UNDERWHELM MARKETS

With no immediate economic crisis to deal with, the new chancellor Phillip Hammond is unlikely to pander to markets’ desires and announce a major fiscal stimulus at next week’s Autumn Statement. Hammond may temporarily delay reducing the cyclically-adjusted deficit for a year or two but, ultimately, he will look to complete his predecessor’s job of rebalancing the government’s books, eventually. On balance, the long-term macro-economic effects of the Brexit-vote have further steepened the UK’s fiscal hill. Hammond will thus target an even more gradual pace of fiscal consolidation than previously planned with some potential for extra borrowing to fund some modest tax cuts and infrastructure spending – but it will be restrained.

Kallum Pickering Macro Flash Download: :  UK FISCAL POLICY: AUTUMN STATEMENT COULD UNDERWHELM MARKETS
18.11.2016 MACRO UPDATE: FRENCH POLITICS, MERKEL, ECB

With a late surge in support for ex-prime minister Francois Fillon, the first round of the centre-right presidential primary this Sunday has turned into a three-way race.

Holger Schmieding Eurozone Update Download: :  MACRO UPDATE: FRENCH POLITICS, MERKEL, ECB
17.11.2016 US ECONOMIC UPDATE: Q4 OFF TO SOLID START

This week was chock-full of US economic data which broadly pointed to solid economic momentum at the start of Q4. All the “hard” data released covered the month of October and it will be a few weeks before any post-election “hard” data is reported. In the near term, the outcome of the presidential elections is unlikely to impact economic activity and if there are any swings in the data, they will likely be transient. The Trump Administration’s policy initiatives will only impact economic activity further out

 

Macro News Download: :  US ECONOMIC UPDATE: Q4 OFF TO SOLID START
15.11.2016 STEADY GROWTH IN EUROZONE, NO IMMEDIATE TRUMP IMPACT ON OUTLOOK

The Eurozone accelerated slightly, to 0.35% qoq in Q3, in line with a flash estimate and slightly above the second quarter of 0.29% qoq. The breakdown by country shows some erratic moves.

Florian Hense Macro Flash Download: :  STEADY GROWTH IN EUROZONE, NO IMMEDIATE TRUMP IMPACT ON OUTLOOK
14.11.2016 UK update: economic outlook, Supreme Court hearing and infrastructure spending

Since the UK voted to leave the EU five months ago, the economy has held up much better than expected, probably owing to the healthy household fundamentals heading into the vote. As we have argued before, it is the long-run risks that need to be watched closely. Through less trade, investment and migration with its biggest market, the EU, Brexit represents a long-term supply-side shock for the UK. On the political side, the apparent lack of progress on a Brexit strategy and the unforeseen hurdles before triggering Article 50 are concerning. They reflect a complacency and lack of planning by the government before the referendum and do not bode well heading into the Brexit-negotiations with an increasingly frustrated EU-27. The stark difference between how the currency market has reacted compared to UK households reflects this economic and political divergence since the vote – see Chart 1.

In this update, we cover the three key themes for the coming months: (1) the economic outlook, (2) the Supreme Court hearing on Article 50, and (3) what to expect in terms of infrastructure spending at the 23 November Autumn Statement.

Kallum Pickering Macro Flash Download: :  UK update: economic outlook, Supreme Court hearing and infrastructure spending
11.11.2016 Prospects under Trump: potential positives and negatives

Markets have responded to the Trump victory with the expectation that the economy will benefit.  The stock market has risen.  Bond yields have spiked up and the US dollar has appreciated.  Will these market expectations be realized? 

Mickey Levy Macro Flash Download: :  Prospects under Trump:  potential positives and negatives
11.11.2016 Macro update: What President Trump means for the European economy

US economic policy matters for Europe: US households are the global consumers of last resort. They can shape global trends for the better or for the worse, as the US boom until 2007 and the subsequent burst have shown. Trade-dependent Europe benefits from a strong and open US economy. On 20 January 2017, Donald Trump will enter the White House. While markets have, at least so far, taken his victory in their stride, it remains to be seen just what his presidency will mean for US economic policy and global economic trends. What parts of the mandate that got him elected will see the light of day? What parts will be watered down, decontaminated or even pronounced dead on arrival by the checks and balances of Washington?

Kallum Pickering Macro Flash Download: :  Macro update: What President Trump means for the European economy
09.11.2016 IMPLICATIONS OF THE TRUMP VICTORY

The election of Donald Trump as President and Republicans winning plurality in both the House of Representatives and Senate represent the electorate’s rejection of the Establishment’s progressive agenda.  It will mean significant changes in the thrust of domestic and international policies.  However, the many checks and balances in Washington, including the important role played by Congress and the various government agencies, will result in far less radical changes than many fear.

Mickey Levy Macro Views Download: :  IMPLICATIONS OF THE TRUMP VICTORY
09.11.2016 TRUMP IN THE LEAD: SERIOUS UNCERTAINTY AHEAD

Donald Trump will be the next US president. Republicans have also won the Congressional elections, keeping a significant majority in the House of Representatives and winning the Senate as well.

Holger Schmieding Macro Flash Download: :  TRUMP IN THE LEAD: SERIOUS UNCERTAINTY AHEAD
08.11.2016 GERMAN PRODUCTION: CORRECTION, BUT TREND REMAINS UPWARDS

Despite a significant correction in September after an even stronger rise in August, German industrial output continues to trend up.

Florian Hense Macro Flash Download: :  GERMAN PRODUCTION: CORRECTION, BUT TREND REMAINS UPWARDS
06.11.2016 OBSERVATIONS ON MARKET REACTIONS TO US ELECTION OUTCOMES

A Clinton victory is the most likely outcome, even though polls suggest that the US presidential race has tightened materially over the last week. This note examines possible immediate and medium-term market reactions to a Clinton or an unlikely Trump victory. As such it reflects these assessments, which are speculative. Obviously, uncertainty abounds.

Mickey Levy Macro Views Download: :  OBSERVATIONS ON MARKET REACTIONS TO US ELECTION OUTCOMES
04.11.2016 ALWAYS READ THE SMALL PRINT: BOE INFLATION FORECAST IS HIGHLY SENSITIVE TO FX RISK

Some underlying assumptions about the future are required for any type of economic forecast. But they need to be understood in order to properly interpret the forecasts.

Kallum Pickering Macro Flash Download: :  ALWAYS READ THE SMALL PRINT: BOE INFLATION FORECAST IS HIGHLY SENSITIVE TO FX RISK
04.11.2016 SOLID US OCTOBER JOBS REPORT

The September employment report was all-round solid, with net new 161k jobs and revisions to August and September adding +44k. Average hourly wage growth picked up to 0.4% on the month (+2.8% yr/yr) and aggregate hours worked advanced 0.2%. Both point to solid gains in total personal incomes in October which should support private consumption. The solid improvement in wages and employment gains point decidedly toward a hike by the FOMC in December. 

Mickey Levy Macro Flash Download: :  SOLID US OCTOBER JOBS REPORT
03.11.2016 BOE ON HOLD AS NEAR-TERM GROWTH OUTLOOK RAISED - CAUTIONS ON TOLERANCE TO HIGHER INFLATION

The better-than-expected near-term economic performance kept the BoE on hold its November meeting. The BoE also removed its previous signal for a second rate cut in 2016 - in line with expectations.

Kallum Pickering Macro Flash Download: :  BOE ON HOLD AS NEAR-TERM GROWTH OUTLOOK RAISED - CAUTIONS ON TOLERANCE TO HIGHER INFLATION
03.11.2016 US PRODUCTIVITY SHOWS SOLID GAINS IN Q3 BUT LONGER TREND REMAINS WEAK

US real nonfarm business productivity rose by 3.1% q/q in Q3 due to strong Q3 GDP growth, but was flat on a year-on-year basis.Productivity has been an enigma in this economic recovery, growing well below long-term trend. Low productivity growth will lead to shallow path of Fed interest rate increases.

Mickey Levy Macro Flash Download: :  US PRODUCTIVITY SHOWS SOLID GAINS IN Q3 BUT LONGER TREND REMAINS WEAK
03.11.2016 HIGH COURT RULING COULD MATERIALLY CHANGE BREXIT CALCULUS - PLUS ECONOMIC IMPLICATIONS

It’s not over yet. Today’s High Court ruling that the British government requires parliamentary approval to begin the UK’s exit from the EU – trigger Article 50 – has the potential to materially change the calculus of Brexit.

Kallum Pickering Macro Flash Download: :  HIGH COURT RULING COULD MATERIALLY CHANGE BREXIT CALCULUS - PLUS ECONOMIC IMPLICATIONS
02.11.2016 BOE INFLATION REPORT PREVIEW – AN OPPORTUNITY TO TAKE STOCK

Better safe than sorry: Who knows what might have happened if the Bank of England (BoE) had not eased monetary policy so aggressively some three months ago at the August Inflation Report.  But it’s probably safe to say, given that the economy has weathered the near-term confidence shock well and markets have largely taken the Brexit-vote in their stride, that the BoE’s actions have probably done some good.

 

But the UK’s better-than-expected economic performance since the vote has removed the need for the BoE to act again .

Kallum Pickering Macro Flash Download: :  BOE INFLATION REPORT PREVIEW – AN OPPORTUNITY TO TAKE STOCK
02.11.2016 FOMC REMAINS ON HOLD

As expected, the FOMC voted to remain on hold at its November 1-2 meeting.  There were no material changes in the language in the Fed’s official Policy Statement.  The Fed’s assessment of economic and labor conditions was virtually unchanged from its September meeting, with strengthening labor markets and an economic pickup for the first half of the year and roughly balanced near-term risks to the economic outlook. 

Mickey Levy Macro News Download: :  FOMC REMAINS ON HOLD
31.10.2016 US: DECENT END TO Q3 PERSONAL SPENDING SETS FAVORABLE Q4 STARTING POINT

The 0.3% rise in real consumption in September implies a pick-up in momentum at the end of Q3 and sets a decent starting point for private consumption in Q4.  Expect real consumption to grow near 2.0% again in Q4. The Fed’s preferred measure of consumer inflation, the core PCE deflator rose 0.1% m/m, maintaining the 1.7% yr/yr rise, very close to the Fed’s 2% target.

Mickey Levy Macro Flash Download: :  US: DECENT END TO Q3 PERSONAL SPENDING SETS FAVORABLE Q4 STARTING POINT
31.10.2016 EUROZONE GDP: STEADY GROWTH AT A SATISFACTORY PACE

Steady as she goes. Largely shrugging off concerns about Brexit and other political risks, the Eurozone economy expanded by 0.34% qoq in Q3, roughly in line with the 0.3% qoq consensus and slightly above the 0.29% qoq pace of Q2.

Holger Schmieding Macro Flash Download: :  EUROZONE GDP: STEADY GROWTH AT A SATISFACTORY PACE
27.10.2016 UK Q3 GDP: BREXIT VOTE IMPACT - NO DOOM, SOME GLOOM INSTEAD OF A BOOM

The first estimate of Q3 GDP showed that the economy expanded by 0.5% qoq – at a faster rate than our own above consensus call of 0.4% qoq.

Kallum Pickering Macro Flash Download: :  UK Q3 GDP: BREXIT VOTE IMPACT - NO DOOM, SOME GLOOM INSTEAD OF A BOOM
25.10.2016 GERMAN UPSWING GAINS MOMENTUM AS IFO IMPROVES FURTHER

Shrugging off earlier concerns about emerging markets and Brexit, Germany’s economic upturn looks set to gain momentum in coming months.

Florian Hense Macro Flash Download: :  GERMAN UPSWING GAINS MOMENTUM AS IFO IMPROVES FURTHER
24.10.2016 US INFRASTRUCTURE SPENDING--A ROADMAP FOR THINKING BROADLY

Now that the need for renewed increases in US infrastructure spending is widely acknowledged and is a focus of Washington policymakers, private companies and the investment community, there are many issues involved that will affect what legislation is ultimately enacted, how it affects the economy, jobs, interest rates and the Fed’s perspective on monetary policy, and of course the investment opportunities it will present. 

Mickey Levy Macro Views Download: :  US INFRASTRUCTURE SPENDING--A ROADMAP FOR THINKING BROADLY
24.10.2016 EUROZONE PMIS POINT TO STRONGEST GROWTH SO FAR IN 2016

Economic growth in the Eurozone accelerated at the start of Q4 according PMI data. The October flash reading of the PMI composite – a good measure of the current state of the economy – reached its highest level so far this year, led by an uptick in Germany.

Florian Hense Macro Flash Download: :  EUROZONE PMIS POINT TO STRONGEST GROWTH SO FAR IN 2016
24.10.2016 MONDAY MACRO UPDATE: SPAIN, PORTUGAL, GERMANY

Spain: Socialists cave in

Portugal: Six-month reprieve

Germany: Preparing the ground for another Merkel victory?

Holger Schmieding Download: :  MONDAY MACRO UPDATE: SPAIN, PORTUGAL, GERMANY
24.10.2016 MONDAY MACRO UPDATE: SPAIN, PORTUGAL, GERMANY

Spain: Socialists cave in

Portugal: Six-month reprieve

Germany: preparing the ground for another Merkel victory?

Holger Schmieding Download: :  MONDAY MACRO UPDATE: SPAIN, PORTUGAL, GERMANY
20.10.2016 October ECB press conference: Come back in December

At today’s press conference, ECB President Mario Draghi said that the Governing Council will ‘define’ its medium-term monetary policy at the December meeting. Draghi responded to questions on any aspect of what the ECB could do in December with ‘it wasn’t discussed’. This decidedly neutral response means that the ECB, as in September, had no intention of changing or redirecting current market expectations. Markets expect the ECB to announce an extension its current QE program at the December meeting. The potential for market dislocations and volatility if the ECB didn’t meet market expectations come December would be high. That the ECB didn’t look to alter market expectations is significant - an extension of QE beyond March 2017 therefore is very likely.

Kallum Pickering Macro Flash Download: :  October ECB press conference: Come back in December
19.10.2016 US: SHARP DROP IN HOUSING STARTS IN SEPTEMBER, Q4 REBOUND EXPECTED

US housing starts fell sharply in September due to an anomalous decline in multifamily starts as single family starts rose. Multifamily building permits rose to their highest level in almost a year and suggest that September’s drop-off was temporary. The outlook remains constructive on housing as fundamentals are solid.

Mickey Levy Macro Flash Download: :  US: SHARP DROP IN HOUSING STARTS IN SEPTEMBER, Q4 REBOUND EXPECTED
19.10.2016 UK LABOUR MARKET STRONG IN AUGUST BUT HARD BREXIT RISK LOOMS LARGE

The UK labour market remained in good shape in August. The unemployment rate was unchanged mom at 4.9%. Average earnings ex. bonus rose faster than expected - by 2.3% yoy (expected 2.1%). The employment rate was 74.5% - the joint highest on record. Employment gains slowed to 106k on a 3m/3m basis  - expected 76k - from 174k in July, but remained above the 10 year average of 66k. 

Early indicators for September showed continued stability. The claimant count, the number of people claiming jobseeker’s allowance, was 776,400, or 2.3% - unchanged from the previous month. Jobless claims increased by just 0.7k after the August number was revised up to 7.1k from 2.4k. Despite the heighted un-certainty from Brexit, job vacancies - a proxy for labour demand - remained high at 749k. Job vacancies were 750k in August.

Kallum Pickering Download: :  UK LABOUR MARKET STRONG IN AUGUST BUT HARD BREXIT RISK LOOMS LARGE
19.10.2016 ECB PREVIEW: MARKETS WILL HAVE TO WAIT UNTIL DECEMBER

Will Draghi announce an extension to the ECB’s asset purchase programme tomorrow? Probably not.

Florian Hense Macro Views Download: :  ECB PREVIEW: MARKETS WILL HAVE TO WAIT UNTIL DECEMBER
18.10.2016 UK INFLATION REACHES HIGHEST LEVEL SINCE NOVEMBER 2014

Headline inflation increased to 1.0% yoy in September, the highest rate since November 2014, up from 0.6% in August, and above expectations of 0.9%.

Kallum Pickering Macro Flash Download: :  UK INFLATION REACHES HIGHEST LEVEL SINCE NOVEMBER 2014
17.10.2016 US: SLIGHT IMPROVEMENT IN SEPTEMBER'S INDUSTRIAL PRODUCTION BUT SECTOR REMAINS FRAGILE

US Industrial Production advanced slightly by 0.1% m/m in September, with only one major category (utilities) declining. Manufacturing production, excluding autos, rose by 0.2% m/m in September but was down slightly on the quarter, reflecting continued weakness in broader factory activity.

Mickey Levy Macro Flash Download: :  US: SLIGHT IMPROVEMENT IN SEPTEMBER'S INDUSTRIAL PRODUCTION BUT SECTOR REMAINS FRAGILE
14.10.2016 US: Weak Core Retail Sales Throughout Q3 a Cause for Concern

US headline retail sales advanced 0.6% m/m in September, driven by a 1.1% jump in auto sales. Elsewhere sales were weak with core retail sales – which matters for GDP – rising only 0.1% m/m. Weak retail activity throughout Q3 raises downside risk for spending in the holiday shopping season

Mickey Levy Download: :  US: Weak Core Retail Sales Throughout Q3 a Cause for Concern
13.10.2016 US: SEPTEMBER FOMC MINUTES SHOW DIVIDE BUT HIKE LIKELY SOON

The minutes to the 20-21 September FOMC meeting highlight the tension between participants preferring a slow wait-and-see approach to policy and those wanting a quick resumption of policy normalization.With the growing concerns both inside and outside the Fed about the limited effect of monetary policy and several participants who preferred to delay a hike saying the decision was “a close call”, we expect a December rate hike. 

Mickey Levy Macro News Download: :  US: SEPTEMBER FOMC MINUTES SHOW DIVIDE BUT HIKE LIKELY SOON
12.10.2016 Implications of the weaker sterling for the UK economy

The latest leg down for sterling reflects the shift in market expectations towards a hard Brexit following recent comments from Prime Minister May and her cabinet. Has sterling found a bottom? That depends on how Brexit negotiations play out. If the UK and EU clash noisily in the forthcoming negotiations or if the UK goes for a ’hard Brexit’, a risk we cannot rule out, sterling is likely to continue to sink further. If the UK and the EU agree to part ways in an amicable manner, and if the UK secures good terms for post-Brexit trade, sterling is likely to rebound along with the UK economic outlook. While the nature and causes of the sterling depreciation has received much attention in markets, we too discussed this last week, less attention has been given to the near-term economic consequences for the UK.

Kallum Pickering Download: :  Implications of the weaker sterling for the UK economy
12.10.2016 EUROZONE OUTPUT: SHRUGGING OFF BREXIT

No serious damage from the Brexit vote. After a revised 0.7% monthly drop in July, Eurozone industrial output rebounded strongly by 1.6% mom in August.

Holger Schmieding Macro Flash Download: :  EUROZONE OUTPUT: SHRUGGING OFF BREXIT
12.10.2016 EUROZONE OUTLOOK: GROWTH, INFLATION AND ECB POLICY

More of the same. Economic fundamentals and recent data suggest that the Eurozone economy will continue to expand at a rate close to 1.5% for the foreseeable future, as it has done since mid-2014 with some quarterly fluctuations.

Holger Schmieding Macro Views Download: :  EUROZONE OUTLOOK: GROWTH, INFLATION AND ECB POLICY
11.10.2016 GERMAN ZEW JUMPS IN OCTOBER SUGGESTING AN ENCOURAGING Q4 START

The German economic expansion accelerated heading into the final quarter of the year according to the October ZEW survey.

Florian Hense Macro Flash Download: :  GERMAN ZEW JUMPS IN OCTOBER SUGGESTING AN ENCOURAGING Q4 START
07.10.2016 US: SOLID SEPTEMBER JOBS REPORT

A 156k new jobs (net) were added to US nonfarm payrolls in September - a deceleration from the prior month’s revised 167k gain (+151k previous). Average hourly wages advanced 0.2% m/m and aggregate hours worked rebounded by 0.4% suggesting faster total personal income growth and better private consumption in September. The household survey was solid with the labor force increasing by 444k, most since February, and a sign of more confidence in job-finding prospects .

Mickey Levy Macro Flash Download: :  US: SOLID SEPTEMBER JOBS REPORT
06.10.2016 GERMAN FACTORY ORDERS POSITIVE POSE UPSIDE RISK FOR ECONOMY IN Q3

German factory orders growth accelerated to 1.0% mom from 0.3% in July. The expansion was much stronger than anticipated (0.3% mom) in August as domestic demand rebounded (2.6% mom after -3.2% in July).

Florian Hense Macro Flash Download: :  GERMAN FACTORY ORDERS POSITIVE POSE UPSIDE RISK FOR ECONOMY IN Q3
05.10.2016 US: ISM NON-MANUFACTURING SENTIMENT CLIMBS OUT OF GLOOM IN SEPTEMBER

The ISM non-manufacturing index advanced 5.7pts to 57.1 in September after souring to a 6.5 year low in August. Given that the index measures businesses’ assessment of conditions relative to the prior month, the high reading in September reflects a rebound from the anomalous weakness in August and should not be taken at face value.

Mickey Levy Macro Flash Download: :  US: ISM NON-MANUFACTURING SENTIMENT CLIMBS OUT OF GLOOM IN SEPTEMBER
03.10.2016 EUROPEAN UPDATE: BREXIT, SPAIN, GERMAN POLITICS

THERESA MAY’S BREXIT PLAN COULD MEAN HARD BREXIT

SPAIN: CLOSER TO A NEW GOVERNMENT

GERMANY: SHARP DROP IN NUMBER OF ASYLUM SEEKERS

Holger Schmieding, Kallum Pickering Macro Flash Download: :  EUROPEAN UPDATE: BREXIT, SPAIN, GERMAN POLITICS
30.09.2016 UK: DEFYING EXPECTATIONS - GDP EXPANDED STRONGLY IN Q2, SERVICES SECTOR GROWTH BETTER

No signs of Brexit in Q2: The UK economic expansion accelerated to 0.7% qoq in Q2, up from 0.4% in Q1, driven by robust quarterly gains in private consumption (0.9%) and a recovery in gross fixed capital investment (1.6%) following two consecutive quarters of decline.

The UK service sector expanded at its fastest pace in four months in July: Output grew by 0.4% mom versus expectations of 0.1%.

 

Kallum Pickering Macro Flash Download: :  UK: DEFYING EXPECTATIONS - GDP EXPANDED STRONGLY IN Q2, SERVICES SECTOR GROWTH BETTER
26.09.2016 GERMAN IFO REBOUNDS AFTER BREXIT DIP

Business confidence in Germany recovered strongly from its post-Brexit dip in July and August. The better-than-expected September reading takes the quarterly average for the third quarter above that of Q2.

Florian Hense Macro Flash Download: :  GERMAN IFO REBOUNDS AFTER BREXIT DIP
26.09.2016 GERMAN IFO REBOUNDS AFTER BREXIT DIP

Business confidence in Germany recovered strongly from its post-Brexit dip in July and August. The better-than-expected September reading takes the quarterly average for the third quarter above that of Q2.

Florian Hense Macro Flash Download: :  GERMAN IFO REBOUNDS AFTER BREXIT DIP
24.09.2016 UK POLITICAL UPDATE: CORBYN VICTORY PUSHES LABOUR EVEN FURTHER LEFT

Sometimes political gambles backfire. A leadership contest that was intended to unseat Labour leader Jeremy Corbyn has done quite the opposite. With 61.8% of the vote (313,209 votes) Jeremy Corbyn handsomely beat his rival Owen Smith. The second landslide victory for Corbyn in a Labour leadership contest after he won last year with 59.5% of the votes has strengthened his position and popular mandate with the party. But Corbyn’s appeal does not stretch much beyond party members.

Kallum Pickering Macro Flash Download: :  UK POLITICAL UPDATE: CORBYN VICTORY PUSHES LABOUR EVEN FURTHER LEFT
23.09.2016 EUROZONE PMI AT 20-MONTH LOW POINTS TO DENT IN GROWTH

Mediocre growth ahead: The Eurozone PMI composite dipped to a 20-month low of 52.6 in today’s prelim-inary reading, after 52.9 in July and versus expectations of 52.8.

Florian Hense Macro Flash Download: :  EUROZONE PMI AT 20-MONTH LOW POINTS TO DENT IN GROWTH
21.09.2016 US: FED STANDS PAT BUT SAYS CASE FOR HIKE HAS STRENGTHENED

The FOMC’s vote to keep the policy rate unchanged was highlighted by three official dissents, reflecting the growing split within the FOMC and the growing concerns that its sustained monetary ease is creating mounting financial and economic distortions. Based on the FOMC’s upgrading of both the description of current economic conditions and assessment of risks, and acknowledgment that the case for a rate increase has strengthened, a hike is possible by year-end. On forecasts, the median estimate of potential growth was lowered by 0.2pp to 1.8%, consistent with the decline in the median longer run federal funds rate to 2.9%.

Mickey Levy Macro Flash Download: :  US: FED STANDS PAT BUT SAYS CASE FOR HIKE HAS STRENGTHENED
20.09.2016 US: HOUSING STARTS HIT SOFT PATCH IN AUGUST

US housing starts declined more than expected in August. This is likely a weather story, as starts gained in all regions except the South where Louisiana was impacted by serious floods. Though starts may not provide a boost to growth in the near-term, fundamentals point to a gradual recovery in coming quarters.

Mickey Levy Macro Flash Download: :  US: HOUSING STARTS HIT SOFT PATCH IN AUGUST
19.09.2016 GERMAN POLITICS: THE ROUGH ROAD AHEAD FOR MERKEL

Another blow for the German chancellor. As in the two other rounds of state elections earlier this year, Angela Merkel's centre-right CDU lost heavily in the city state of Berlin.

Holger Schmieding Macro Views Download: :  GERMAN POLITICS: THE ROUGH ROAD AHEAD FOR MERKEL
15.09.2016 US Industrial Data Shows Further Weakness

*US industrial production declined by 0.4% m/m (-1.1% yr/yr) as the gains in June and July proved fleeting. *Manufacturing production excluding motor vehicles – a gauge for the underlying trend in demand - declined by 0.5%. *Early readings on manufacturing sentiment for September suggest that sluggish activity continued through the end of the quarter

Mickey Levy Macro Flash Download: :  US Industrial Data Shows Further Weakness
15.09.2016 US: Sluggish Retail Sales Raises Doubt on H2 Rebound

*Control retail sales are on track to rise by an annualized 1% this quarter, well below the 7% increase in Q2. *Weak consumer activity suggests economic slowdown is broad-based, placing doubt on H2 rebound. *If soft economic data continue, policy expectations for later in the year will change

Mickey Levy Macro Flash Download: :  US: Sluggish Retail Sales Raises Doubt on H2 Rebound
15.09.2016 UK: BOE MAINTAINS GUIDANCE FOR A FURTHER RATE CUT IN 2016

This month’s Monetary Policy Committee meeting follows on from the August Inflation Report where the BoE sharply downgraded its forecast for GDP growth and announced a broad expansion of monetary policy.

Kallum Pickering Macro Flash Download: :  UK: BOE MAINTAINS GUIDANCE FOR A FURTHER RATE CUT IN 2016
15.09.2016 EUROZONE INFLATION INERTIA POINTS TO QE EXTENSION

Eurozone headline inflation remains well below the ECB’s target of ‘close to but below 2.0%’. While the headline rate should increase over the medium-term, to gradually converge with core inflation, both headline and core inflation will likely still be subdued by the end of the year.

Florian Hense Macro Flash Download: :  EUROZONE INFLATION INERTIA POINTS TO QE EXTENSION
15.09.2016 UK: retail sales continue to beat expectations - good news for Q3 GDP

Despite the small contraction on a monthly basis, UK retail sales continued to perform strongly in August, adding further signs that the UK economy is holding up better than expected following the June 23 Brexit vote. Retail sales ex. auto fuel declined by 0.3% mom (versus est. -0.4%). This follows a sizeable upward revision to the already strong July data when retail sales ex. auto fuel expanded by 2.1% mom (1.5% first est.) - the strongest monthly growth rate since December 2013. Following the slight dip in August, the 3M/3M growth rate eased a little to 1.7% compared to 2.1% in July, but remained above the long-term average of 0.7%. Growth in retail sales ex. auto fuel accelerated to 5.9% on an annual basis compared to an upwardly revised 5.8% expansion in July.

Kallum Pickering Macro Flash Download: :  UK: retail sales continue to beat expectations - good news for Q3 GDP
14.09.2016 UK labour market remained solid after the Brexit vote

Although it is still early days, the UK labour market is yet to show any Brexit effect for the period immediately before and after the June 23 vote. The UK unemployment rate remained unchanged at 4.9% in the three months to July. Unemployment fell to 4.7% in July based on the single-month estimate. While employment increased by 174k on a 3m/3m basis, taking the employment rate to a record 74.5%, the annual rate of wage growth ex. bonuses edged down slightly to 2.1% from 2.3% in June.

Kallum Pickering Download: :  UK labour market remained solid after the Brexit vote
13.09.2016 POLITICAL UPDATE: US ELECTIONS

With eight weeks to go until the US elections on 8 November, the most market-friendly outcome remains the most likely result: Hillary Clinton becomes US president while the Republicans maintain control of the House of Representatives.

Holger Schmieding Macro Views Download: :  POLITICAL UPDATE: US ELECTIONS
12.09.2016 YIELDS ARE UP: GOOD NEWS OR BAD NEWS?

Having first dropped on exaggerated expectations that the ECB may ease policy further, bond yields have risen visibly since the ECB disappointed such hopes yesterday.

Holger Schmieding Macro Views Download: :  YIELDS ARE UP: GOOD NEWS OR BAD NEWS?
08.09.2016 ECB: WAIT AND SEE AS POLICY IS EFFECTIVE

Contrary to widespread expectations that the ECB may announce an extension of its €80bn asset purchase programme beyond the end of March 2017, the ECB did not do so today.

Holger Schmieding Macro Flash Download: :  ECB: WAIT AND SEE AS POLICY IS EFFECTIVE
07.09.2016 UPTURN IN UK INDUSTRIAL CONTINUES IN JULY

The ONS industrial production report for July provides the first glimpse of economic data that will be included in the Q3 GDP estimate (preliminary). While industrial production makes up just 16% of GDP, the few tenths of a percentage point that a strong quarter can add to overall growth could prove significant in the coming quarters as the UK absorbs the shock of the Brexit vote. 

Industrial output expanded in July by 0.1% on a monthly basis (exp. -0.2%) and by 1.0% on a 3M/3M basis. While output dipped by 0.9% mom in the largest sub-sector, manufacturing, on a 3M/3M basis, output increased by 0.5%. We would caution on attributing the manufacturing dip to Brexit. As the ONS point out in the report ‘since July 2015, manufacturing…has been volatile with no obvious underlying pattern’. There was a broad-based expansion across all other sub-sectors. This included strong expansions in mining & quarrying (+4.7% mom) and oil and gas (+5.6% mom).

Kallum Pickering Macro Flash Download: :  UPTURN IN UK INDUSTRIAL CONTINUES IN JULY
07.09.2016 EUROPEAN POLITICAL UPDATE: ITALY, FRANCE, AUSTRIA

ITALY: CRUCIAL REFERENDUM IN LATE NOVEMBER OR EARLY DECEMBER. FRANCE: WARMING UP FOR THE VOTES. AUSTRIA: ANOTHER CLOSE SHAVE?

Holger Schmieding Macro Views Download: :  EUROPEAN POLITICAL UPDATE: ITALY, FRANCE, AUSTRIA
06.09.2016 GERMAN FACTORY ORDERS INCREASE ON STRONGER EUROZONE DEMAND

German factory orders rose 0.2% mom in July, recovering from the 0.3% mom drop in June. While orders came in below the consensus estimate for the fourth consecutive month, the outlook for the German goods-producing sector looks promising given the stronger export orders from its Eurozone trading partners.

Florian Hense Macro Flash Download: :  GERMAN FACTORY ORDERS INCREASE ON STRONGER EUROZONE DEMAND
05.09.2016 ECB PREVIEW: NO COMPELLING NEED TO ACT NOW

The pace of recovery in the Eurozone remains “unsatisfactory” according to ECB board member Yves Mersch. Does that mean that the ECB will have to act again this Thursday? Not necessarily.

Holger Schmieding Macro Views Download: :  ECB PREVIEW: NO COMPELLING NEED TO ACT NOW
05.09.2016 UK: August services PMI adds to signs of post-Brexit resilience

The services PMI recovered strongly to 52.9 in August (exp. 50.0). This followed the sharp drop to 47.4 in July after the Brexit vote. The 5.5 monthly gain is the largest in the survey’s 20 year history. Companies linked the improvement to a recovery in confidence, higher tourism and a pick-up in exports from the weaker sterling. On the downside from the weaker sterling, firms reported the sharpest rise in input price inflation for 33 months - in line with our - and the market’s - expectation that UK inflation is set to rise sharply in the coming months. 

Kallum Pickering Macro Flash Download: :  UK: August services PMI adds to signs of post-Brexit resilience
05.09.2016 EUROPEAN POLITICAL UPDATE: GERMAN REBUKE FOR MERKEL; SPANISH STALEMATE

GERMANY: WILL THE REGIONAL REBUKE FOR MERKEL MAKE A DIFFERENCE? Another embarrassing regional election result for chancellor Angela Merkel

Holger Schmieding Macro Views Download: :  EUROPEAN POLITICAL UPDATE: GERMAN REBUKE FOR MERKEL; SPANISH STALEMATE
02.09.2016 US AUGUST JOBS REPORT SOFT

The US employment report for August was soft. A net new 151k jobs were added to nonfarm payrolls, 29k below the Consensus expectation, and a sizable slowdown from the +270k gains in July and June which represented bounce backs from the anomalous low gain in May.

Mickey Levy Macro Flash Download: :  US AUGUST JOBS REPORT SOFT
01.09.2016 US ISM POINTS TO FURTHER WEAKNESS IN MANUFACTURING SECTOR IN AUGUST

ISM manufacturing headline index returns below 50 for the first time since February. The magnitude of the monthly decline (-3.2) is the largest since January 2014.

Mickey Levy Macro Flash Download: :  US ISM POINTS TO FURTHER WEAKNESS IN MANUFACTURING SECTOR IN AUGUST
31.08.2016 LOW EUROZONE INFLATION REMAINS SOURCE OF CONCERN FOR ECB

Underlying price pressures in the Eurozone continue to lack a convincing upward trend. Eurozone inflation disappointed in August falling short of an expected acceleration.

Florian Hense Macro Flash Download: :  LOW EUROZONE INFLATION REMAINS SOURCE OF CONCERN FOR ECB
30.08.2016 EUROZONE CONFIDENCE FALLS, BUT FROM HIGH LEVEL

Eurozone confidence dropped in August. After the surprisingly resilient July reading which implied a broadly stable growth outlook for the Eurozone, today’s results provide more evidence that the Eurozone economy will lose some momentum in the second half of 2016.

Florian Hense Macro Flash Download: :  EUROZONE CONFIDENCE FALLS, BUT FROM HIGH LEVEL
30.08.2016 COPING WITH THE POLITICS OF ANGER

For better or worse, we are living in exciting times. Globalisation and rapid technological change are creating huge opportunities.

Holger Schmieding Macro Views Download: :  COPING WITH THE POLITICS OF ANGER
26.08.2016 US NEW RESIDENTIAL CONSTRUCTION INCREASES AS EXISTING SUPPLY REMAINS LOW

New home sales jumped by 12.4% to an annualized 654k in July, the highest pace since October 2007, as sales are being buoyed by robust demand, low mortgage rates, solid job and income gains, and the short supply of for-sale existing homes. Despite the recent improvement, new home sales are still well off their pre-recession pace as there is still plenty of room for improvement in the new residential construction sector.

Mickey Levy Macro Flash Download: :  US NEW RESIDENTIAL CONSTRUCTION INCREASES AS EXISTING SUPPLY REMAINS LOW
26.08.2016 US DURABLE GOODS REPORT DIM ON CURRENT ACTIVITY BUT BRIGHTER ON THE FUTURE

Core durable goods shipments declined by 0.4% in July raising doubt about a rebound in business investment this quarter. However, the robust 1.6% m/m increase in core durable goods orders suggest that a turnaround in factory activity may be near.

Mickey Levy Macro Flash Download: :  US DURABLE GOODS REPORT DIM ON CURRENT ACTIVITY BUT BRIGHTER ON THE FUTURE
26.08.2016 UK: STRONG Q2 GDP - ROBUST DOMESTIC DEMAND PLUS UPSIDE SURPRISE ON INVESTMENT

UK economic growth accelerated to 0.6% qoq in Q2 from 0.4% in Q1. As expected, the more detailed data today confirmed the first estimate published 27 July. Remarkably, the cyclical performance of the UK economy improved in the second quarter despite widespread signs in the soft data that economic growth was slowing, weighed down by the uncertainty related to the June 23 Brexit vote. Early signs suggest that this disparity between the hard and soft data has continued after the vote. July data for the labour market and retail spending improved despite the falls in reported consumer and business confidence.

Kallum Pickering Macro Flash Download: :  UK: STRONG Q2 GDP - ROBUST DOMESTIC DEMAND PLUS UPSIDE SURPRISE ON INVESTMENT
26.08.2016 UK: STRONG Q2 GDP - ROBUST DOMESTIC DEMAND PLUS UPSIDE SURPRISE ON INVESTMENT

UK economic growth accelerated to 0.6% qoq in Q2 from 0.4% in Q1. As expected, the more detailed data today confirmed the first estimate published 27 July. Remarkably, the cyclical performance of the UK economy improved in the second quarter despite widespread signs in the soft data that economic growth was slowing, weighed down by the uncertainty related to the June 23 Brexit vote. Early signs suggest that this disparity between the hard and soft data has continued after the vote. July data for the labour market and retail spending improved despite the falls in reported consumer and business confidence.

Kallum Pickering Macro Flash Download: :  UK: STRONG Q2 GDP - ROBUST DOMESTIC DEMAND PLUS UPSIDE SURPRISE ON INVESTMENT
26.08.2016 ECB POLICY: LESS EFFECTIVE BUT STILL WORKING

Monetary policy is still working in the Eurozone. While less effective than in previous cycles, the ECB’s stimulus is yielding some results. In July, credit growth in the Eurozone strengthened slightly further. The monetary and credit dynamics are compatible with trend growth in GDP, which we put at roughly 1.6%. Although the impact of Brexit, political uncertainty and possibly renewed concerns about China will likely push actual Eurozone growth slightly below its trend rate in Q3 and Q4, we expect the region to return to trend growth in early 2017.

Holger Schmieding Macro Flash Download: :  ECB POLICY: LESS EFFECTIVE BUT STILL WORKING
25.08.2016 GERMAN IFO SIGNALS DENT TO GROWTH IN Q3

After a strong first half of the year, the German economy will probably lose some momentum in this and the next quarter. The business climate fell to 106.2 in August after 108.3 in July and well below consensus of 108.5.

Florian Hense Macro Flash Download: :  GERMAN IFO SIGNALS DENT TO GROWTH IN Q3
24.08.2016 BREXIT? WHAT BREXIT? TAKING STOCK TWO MONTHS AFTER THE VOTE

Two months ago, the world woke up to learn that the UK had voted to leave the European Union. For two major reasons, the initial shock has subsided fast: 
•        Instead of taking charge, the leading Brexiteers lost the ensuing power struggle within the Conservative party as the mildly pro-EU Theresa May prevailed within just three weeks.
•        May’s calm and slow approach to Brexit issues has fostered the impression that she will seek realistic co-operation rather than ideological confrontation with the EU27.
 
While nothing has been settled and the uncertainty about the UK’s future access to its major market seems to be weighing on investment and parts of the real estate market in the UK, the country did not fall into an escalating economic and political crisis. Financial markets re-priced UK assets in an orderly fashion through the exchange rate. Although a weaker Sterling does little to ease concerns about the future of Greater London as the services centre for Europe, it helped to lure more tourists to the UK.‎ In the EU27, the repercussions of the Brexit vote have been rather mild.

Holger Schmieding Macro Flash Download: :  BREXIT? WHAT BREXIT? TAKING STOCK TWO MONTHS AFTER THE VOTE
24.08.2016 UK HOUSING MARKET RESILIENT IN JUL

Loans for house purchase resilient in July. According to the British Bankers’ Association, the number of loans for house purchase dropped only slightly to 37,662 in July, from 39,763 in June. While the number of loans for house purchase has fallen in recent months after peaking at 46,386 in January, they remain far above the lows of the financial crisis (17,087 in Nov 2008) and the euro crisis (27,752 in Dec 2010). The fall in loans for house purchase is in part due to the heightened uncertainty and lower confidence since the Brexit-vote. The higher rate of stamp duty on second homes since April is also a significant factor. Separate data for July from HM Revenue and Customs (HMRC) showed that residential property transactions remained stable after the vote. There were 94,550 transactions in July according to HMRC compared to 95,430 in June -  up from the April low of 80,090 when stamp duty changes came into effect.

Kallum Pickering Macro Flash Download: :  UK HOUSING MARKET RESILIENT IN JUL
23.08.2016 FED'S JACKSON HOLE SYMPOSIUM: WHAT IT'S ALL ABOUT AND WHAT TO LOOK FOR

The Fed’s Jackson Hole Symposium will focus on very important large macro topics that are critically important to financial market participants, including the historically low interest rates and the unprecedented monetary policies of global central banks.  However, besides acknowledging the challenges of the current environment, Yellen’s presentation and any remarks by other Fed members at the symposium are not expected to yield any new insights about either the near-term path of US Fed monetary policy or any new thinking about what the Fed can or should do to improve economic performance.

Mickey Levy Macro Flash Download: :  FED'S JACKSON HOLE SYMPOSIUM: WHAT IT'S ALL ABOUT AND WHAT TO LOOK FOR
22.08.2016 MONDAY MACRO UPDATE: EU POLITICS, ECONOMIC OUTLOOK, JACKSON HOLE

Merkel, Hollande and Renzi meet today to discuss post-Brexit EU reforms. The informal get-together starts a series of intra-EU discussions ahead of the 16 September summit where EU27 leaders want to outline some reform ideas to be elaborated in more detail in the six months thereafter.

Holger Schmieding Macro Views Download: :  MONDAY MACRO UPDATE: EU POLITICS, ECONOMIC OUTLOOK, JACKSON HOLE
18.08.2016 WHAT BREXIT? UK RETAIL SALES ACCELERATE STRONGLY FOLLOWING BREXIT VOTE

UK retail sales growth accelerated strongly after the Brexit vote despite soft data for July showing a sharp negative shock to consumer confidence. Retail sales volumes ex. auto fuel beat expectations, growing by 1.5% mom (exp. 0.3%) and 5.4% yoy (exp. 3.9%) – the fastest annual growth rate since September 2015. While monthly data are volatile, the 3M/3M change paints a clear picture of improving household demand in the period before and after the June 23 EU referendum. In the three months to July, retail sales ex. auto fuel increased by 1.9%, almost three times the average of 0.7% since 2000 and the fastest rate since December 2014.

Kallum Pickering Macro Flash Download: :  WHAT BREXIT? UK RETAIL SALES ACCELERATE STRONGLY FOLLOWING BREXIT VOTE
17.08.2016 UK: LABOUR MARKET STRONG IN JUNE BEFORE THE BREXIT VOTE WHILE JOBLESS CLAIMS FELL IN JULY

Today’s labour market data is mainly for the month of June, before the Brexit vote. The data shows no evidence of Brexit-jitters and instead reflects the strong economic conditions that preceded the referendum.  Unemployment remained stable at 4.9% in the three months to June, in line with consensus expectations, while 3m/3m employment increased by 172k (exp. 150K). The UK employment rate for 16-64 year olds was 74.5%, the highest on record. Weekly earnings growth including and excluding bonuses remained sluggish but improved by 0.1ppt compared to May, increasing by 2.4% and 2.3% respectively.

Kallum Pickering Macro Flash Download: :  UK: LABOUR MARKET STRONG IN JUNE BEFORE THE BREXIT VOTE WHILE JOBLESS CLAIMS FELL IN JULY
16.08.2016 GERMAN ZEW REBOUNDS FROM INITIAL SHOCK

German ZEW surveys rebounded in July to pre-Brexit vote levels. While the expectations indicator (+6 months) recovered to 0.5 from -6.8 in July, it was below expectations of 2.0. Current assessment, the more reliable indicator of underlying conditions, rose to 57.6 (vs. 49.8 in July and 50.2 expected).

Florian Hense Macro Flash Download: :  GERMAN ZEW REBOUNDS FROM INITIAL SHOCK
16.08.2016 UK INFLATION INCREASES IN JULY - NO SIGNS OF BREXIT EFFECT JUST YET

Headline inflation in the UK increased to 0.6% yoy in July from 0.5% in June, in line with our expectations. Core inflation, a measure of underlying inflation that subtracts volatile components such as food and energy, slowed to 1.3% yoy in July compared to 1.4% yoy the previous month. The impact of the Brexit vote will take time to feed through into inflation. The changes in the components of July inflation reflected the improving underlying economic conditions pre-vote. Prices continued to fall for food and non-alcoholic beverages, due to strong competition in the supermarket sector. Most of the upward pressure came from components linked to growth in discretionary spending such as (1) restaurants and hotels and (2) recreation and culture.

Kallum Pickering Macro Flash Download: :  UK INFLATION INCREASES IN JULY - NO SIGNS OF BREXIT EFFECT JUST YET
12.08.2016 EUROZONE Q2 GDP SLOWS, GERMANY SURPRISES, ITALY DISAPPOINTS

Boosted by strong results from Germany, Spain and the Netherlands, the Eurozone economy continued to expand at a satisfactory pace in Q2. Although growth slowed from an unusually strong 0.6% qoq gain in Q1 to 0.3% qoq in Q2 as the unusually mild winter gave way to ‎a more normal spring, the underlying trend remains encouraging.

Florian Hense Macro Flash Download: :  EUROZONE Q2 GDP SLOWS, GERMANY SURPRISES, ITALY DISAPPOINTS
12.08.2016 HAS THE BOE STARTED A CURRENCY WAR? NOT AT ALL

A weaker currency during a downturn can limit the downside for a flagging economy. Higher import costs and more competitively priced exports often improve the trade balance as imports decline while exports rise, resulting in a plus for GDP. After last week’s rate cuts and new asset purchases (QE), the BoE has been accused of entering a ‘currency war’. This is a little odd. The notion ignores historical evidence for the UK and elsewhere.

Kallum Pickering Macro Flash Download: :  HAS THE BOE STARTED A CURRENCY WAR? NOT AT ALL
12.08.2016 GERMAN UPSWING TAKES ONLY A SMALL BREATHER

After a bounce in early 2016, the German upswing took less of a breather than expected  in Q2. Despite a drag from a weather-related drop in construction, gains in private and public consumption and a further rise in exports raised German GDP by 0.4% qoq, well ahead of the 0.2% qoq consensus. The downside risk to our own 0.3% qoq call did not materialise.

Holger Schmieding Macro Flash Download: :  GERMAN UPSWING TAKES ONLY A SMALL BREATHER
11.08.2016 AFTER THE SUMMER BREAK: NO NEWS IS GOOD NEWS

Back in the office after a few weeks spent near the Arctic circle, a first glance suggests that not much has changed. Except for unexpectedly weak US GDP in Q2, most data and developments seem to be roughly in line with our expectations. By and large, markets are behaving accordingly. Valuations still reflect a fundamental caution signalled for instance by the huge yield gap between “safe haven” bonds and equity dividends. In such an environment, markets are inclined to stabilise or move up in the absence of major news, that is if no major risk materialises. That seems to have been the case in the last few weeks.

Holger Schmieding Macro Flash Download: :  AFTER THE SUMMER BREAK: NO NEWS IS GOOD NEWS
05.08.2016 BOE GETS CREATIVE IN RESPONSE TO BREXIT SHOCK

Here are the key points from the August Inflation Report.
● A 25bp rate cut, £60bn increase in quantitative easing (QE), £10bn corporate bond purchases and new Term Funding Scheme.
● More easing likely: A “majority of members expected to support a further cut in the bank rate…during the course of the year”.
● The MPC unanamously voted for a rate cut, voted 8-1 on corporate bond purchases and voted 6-3 on expanding QE.
● There is no recession in the Bank of England’s (BoE) central forecast, but the Monetary Policy Committee (MPC) sees “little growth in GDP during the second half of year”.

Macro Flash Download: :  BOE GETS CREATIVE IN RESPONSE TO BREXIT SHOCK
01.08.2016 BoE preview: going for a goldilocks stimulus

Soft data for the month of July indicate that the UK economy has slowed abruptly following the Brexit vote, with a risk of recession in the second half of 2016. In light of the comments made in the past month by the BoE governor Mark Carney ‘easing over the summer’, plus explicit guidance in the July meeting minutes that ‘most members of the Committee expect monetary policy to be loosened in August’, it is not a question of if the BoE will ease policy later this week, but by how much.

Kallum Pickering Macro Flash Download: :  BoE preview: going for a goldilocks stimulus
29.07.2016 EUROZONE Q2 GDP GROWTH SLOWED BEFORE BREXIT

The Eurozone economy slowed in the second quarter, from 0.6% to 0.3%. The slowdown in the second quarter was, however, mainly for arithmetic reasons. The first quarter was unusually strong due to one-time effects.

Florian Hense Macro News Download: :  EUROZONE Q2 GDP GROWTH SLOWED BEFORE BREXIT
29.07.2016 BREXIT UPDATE: REFERENDUM IMPACT ON UK HOUSEHOLDS IN 4 CHARTS

Households are the main engine of growth for the UK economy. 2/3 of GDP is private consumption. Brexit uncertainty started to weigh on consumer confidence in the run up to the referendum. Data for household conditions has deteriorated further in July. While gains in net trade from the weaker sterling may offset drops in business investment, the evolution of private consumption over the coming quarters will determine by how much GDP growth slows, or indeed, if the UK enters a recession.Today, GfK published household survey data for the month of July. Key points are as follows: 

Kallum Pickering Macro Flash Download: :  BREXIT UPDATE: REFERENDUM IMPACT ON UK HOUSEHOLDS IN 4 CHARTS
28.07.2016 EUROZONE UPDATE: UPSIDE RISK FOR Q2 EUROZONE GROWTH

For tomorrow’s preliminary flash estimate of GDP growth in Q2, we expect to see a soft reading of 0.2% qoq. This is mainly an arithmetic effect following the stellar first quarter (0.6%).

Florian Hense Macro News Download: :  EUROZONE UPDATE: UPSIDE RISK FOR Q2 EUROZONE GROWTH
27.07.2016 UK GDP - RESILIENT TO BREXIT RISK IN Q2

The UK economy accelerated in the second quarter of the year despite the notable weakness in soft data in the months before the EU referendum. GDP expanded by 0.6% qoq compared to 0.4% in Q1 and versus expectations of 0.5%. The acceleration in the second quarter is in sharp contrast to Q2 PMI data that suggested growth of 0.3-0.4% qoq, indicating that soft data somewhat exaggerated the impact of Brexit uncertainty.  If this trend continues, it supports our call that the UK will stagnate and avoid recession in the near-term in reference to the sharp weakness soft data since the Brexit vote on June 23.

 

Kallum Pickering Macro Flash Download: :  UK GDP - RESILIENT TO BREXIT RISK IN Q2
27.07.2016 Economic and political consequences of attacks in Europe

Our core theme for Europe in 2016 is that we need to watch politics first, then economics. Brexit has been a realisation of such political risk.  As European nations debate how to move forward, including how to negotiate with the UK on the details of its exit from the EU, the spate of attacks may contribute to the changed political environment.  While the attacks could strengthen the ties between European nations, increasing cooperation on security and foreign policy issues to present a united front to the challenges, the opposite may occur.  Right-wing populists could heighten their arguments to limit migration and encourage retreat from European co-operation.  At a minimum, there will be more pressure on European leaders who are striving to maintain cohesion in the face of rising concerns among citizens. The attacks also carry economic risks.

Kallum Pickering Macro Flash Download: :  Economic and political consequences of attacks in Europe
25.07.2016 BREXIT UPDATE: UK ECONOMY HIT HARD, EUROZONE RESILIENT SO FAR

UK – stagnation ahead, significant downside risks: Data released today from the Confederation of British Industry (CBI) showed that industrial orders remained resilient following the Brexit vote while the level of optimism in the UK industrial sector fell to its lowest level since 2009. Eurozone – withstanding the Brexit shock – some risks to the outlook: In contrast to data for the UK in the month of July which has sharply deteriorated, Eurozone data remains modestly positive on-balance.

Kallum Pickering Macro Flash Download: :  BREXIT UPDATE: UK ECONOMY HIT HARD, EUROZONE RESILIENT SO FAR
25.07.2016 GERMAN IFO AFTER BREXIT: ENCOURAGINGLY RESILIENT

Ifo survey data for July beat expectations across the board – showing no real signs of an impact from the Brexit vote. This is more evidence, along with the PMI data published last Friday, that the EU’s largest economy is weathering the Brexit storm. 

Florian Hense Macro Flash Download: :  GERMAN IFO AFTER BREXIT: ENCOURAGINGLY RESILIENT
22.07.2016 UK JULY PMIS - KNEE-JERK REACTION TO BREXIT VOTE

The Brexit vote and the short but messy period in British politics immediately after June 23 present serious downside risks to the near-term outlook. The limited soft data for the period since the UK voted to leave the EU has been mixed so far. Confidence indicators and Bank of England field work point to resilient demand, and stagnation rather than recession in the coming quarters. But the PMI data for July released today point to a sharp drop in economic activity. The risk of a recession in H2 2016 is significant. We expect the Bank of England to respond to this threat with a fairly aggressive stimulus package at the upcoming Inflation Report on the 4 August. We look for a 25bps rate cut with a 60% chance of QE – circa £100bn.

Kallum Pickering Macro Flash Download: :  UK JULY PMIS - KNEE-JERK REACTION TO BREXIT VOTE
21.07.2016 ECB WILL BE DATA-DEPENDENT IN CONSIDERING POTENTIAL RESPONSE TO BREXIT

Despite the potential risks the Brexit vote presents to the near-term growth outlook for Eurozone economy, the ECB was decidedly neutral in their first opportunity to address market concerns since June 23. While the ECB reiterated previous guidance of being “ready, willing and able” to expand the current stimulus, if required, they did not provide a significant advance on their pre-referendum guidance.

Florian Hense Macro Flash Download: :  ECB WILL BE DATA-DEPENDENT IN CONSIDERING POTENTIAL RESPONSE TO BREXIT
21.07.2016 ECB PREVIEW: KEEPING ITS OPTIONS OPEN

The ECB’s Governing Council will come together today for its first monetary policy meeting since the Brexit vote on 23 June. While Eurozone growth looks set to slow in the coming quarters, we expect the ECB to keep its policy setting unchanged, for now (main policy rate at 0.0%, deposit rate at -0.4% and total monthly asset purchases at €80 bn).

Florian Hense Macro Flash Download: :  ECB PREVIEW: KEEPING ITS OPTIONS OPEN
20.07.2016 Brexit update: can the UK avoid a recession?

Following the UK’s vote to leave the EU on June 23 uncertainty about the long-term outlook has risen. But so far, the limited information on the economy for the period since the referendum is consistent with a stagnation in the near-term rather than an outright recession.

Kallum Pickering Macro Flash Download: :  Brexit update: can the UK avoid a recession?
19.07.2016 GERMAN ZEW: BREXIT TAKES TOLL ON INVESTOR CONFIDENCE

German ZEW surveys drop to euro crisis levels on Brexit shock. Expectations dropped to -6.8 (vs. +9.0 expected and +19.2 in June before the Brexit vote).

Florian Hense Macro News Download: :  GERMAN ZEW: BREXIT TAKES TOLL ON INVESTOR CONFIDENCE
14.07.2016 BOE HOLDS FOR NOW – SIGNALS EASING IN AUGUST

The jump in sterling and gilt yields immediately after the BoE published its decision to keep policy unchanged in July gives the impression that the MPC minutes were hawkish. This is not the case.

Kallum Pickering Macro Flash Download: :  BOE HOLDS FOR NOW – SIGNALS EASING IN AUGUST
14.07.2016 Brexit update - politics, monetary policy and housing

Brexit means Brexit (eventually), as May sets up a Brexit cabinet. 60% chance BoE cut rates today as the MPC holds first official meeting since Brexit vote.Housing activity slowed sharply in June according to RICS.

Kallum Pickering Download: :  Brexit update - politics, monetary policy and housing
13.07.2016 SPAIN: END OF POLITICAL STALEMATE?

After seven months of stalemate, Spain may be one step closer to the end of its political paralysis. The liberal Ciudadanos party will likely decide today to allow Mariano Rajoy to form a minority government by abstaining in the decisive vote in parliament.

Florian Hense Macro Flash Download: :  SPAIN: END OF POLITICAL STALEMATE?
12.07.2016 UK: ECONOMIC IMPLICATIONS OF PRIME MINISTER MAY

Theresa May will replace David Cameron as UK Prime Minister on Wednesday. In this flash we discuss the key economic implications relating to her appointment.

Kallum Pickering Macro Flash Download: :  UK: ECONOMIC IMPLICATIONS OF PRIME MINISTER MAY
11.07.2016 JULY MPC MEETING PREVIEW: READY TO ACT, CHANCE OF RATE CUT

The Bank of England’s (BoE) rate setting committee will meet on Thursday for the first Monetary Policy Committee (MPC) meeting since the UK voted to leave the EU on June 23.  The minutes released at midday will detail the MPC’s assessment of the economy since the Brexit vote as well as any policy changes. We see a 60% chance that the nine member MPC votes to cut the bank rate, if so, probably by 25bps. However, there is a chance that the MPC holds for now, and instead opts to send a dovish signal that the bank will ease monetary policy three weeks later at the August Inflation Report when it is due to publish its revised economic forecasts.

Kallum Pickering Macro Flash Download: :  JULY MPC MEETING PREVIEW: READY TO ACT, CHANCE OF RATE CUT
08.07.2016 BREXIT FALLOUT: UK GFK CONFIDENCE FALLS, GERMAN SUPPORT FOR EU RISES

Following the UK vote to leave the EU, consumer confidence in the UK has suffered its sharpest fall in 21 years.

Holger Schmieding Macro Views Download: :  BREXIT FALLOUT: UK GFK CONFIDENCE FALLS, GERMAN SUPPORT FOR EU RISES
07.07.2016 GERMAN PRODUCTION: CORRECTION AFTER STRONG Q1

Industrial production in Germany unexpectedly dropped in May with political uncertainty in Europe ahead of the British vote on EU membership likely weighing on activity.

Florian Hense Macro Flash Download: :  GERMAN PRODUCTION: CORRECTION AFTER STRONG Q1
05.07.2016 UK: CONFIDENCE CRISIS BUT NO EVIDENCE OF RECESSION YET

The uncertain business environment and economic outlook ahead of the Brexit vote weighed on GDP growth in the second quarter. The full set of PMIs for Q2 is in line with our call that the economy expanded by 0.3% qoq.

Kallum Pickering Macro Flash Download: :  UK: CONFIDENCE CRISIS BUT NO EVIDENCE OF RECESSION YET
05.07.2016 UPDATE ON BREXIT CONTAGION RISKS

Will the British vote to leave the EU embolden anti-European populists elsewhere in Europe – or will the political and economic uncertainty into which the vote has plunged the UK serve as a salutary lesson for voters elsewhere? For the EU-27, this could turn into the key issue to watch in the coming months.

Holger Schmieding Macro Views Download: :  UPDATE ON BREXIT CONTAGION RISKS
05.07.2016 EUROZONE PMI HOLDS STEADY BEFORE BREXIT

The final reading of June’s PMI composite of 53.1 was unchanged from May and stable at a level in line with trend growth. This is the 19th consecutive expansion of the index (a level of 50 indicates neutral).

Florian Hense Macro Flash Download: :  EUROZONE PMI HOLDS STEADY BEFORE BREXIT
04.07.2016 UK AND EU: UPDATE ON BREXIT FALLOUT

KEY ISSUES FOR THE UK: Frontrunners for Conservative party leader vary on timing of Brexit talks with EU. UK Government debt still not a serious risk to the UK economy following change to fiscal plans. KEY ISSUES FOR THE EU-27: The future of the EU. French politics. Bellwether Austria

Holger Schmieding Macro Views Download: :  UK AND EU: UPDATE ON BREXIT FALLOUT
01.07.2016 NOTES ON THE SCOTTISH ISSUE

Eight days ago, 62% of Scots voted to stay in the EU. Scotland's regional government now wants to secure its nation's place in the EU.‎

Holger Schmieding Macro Views Download: :  NOTES ON THE SCOTTISH ISSUE
29.06.2016 BREXIT IMPACT ON EU: CONTAGION OR SALUTARY LESSON?

From an EU-27 perspective, the big British question is largely settled. Sadly, the UK has voted to leave. Unless the UK relents, which I consider as unlikely but not impossible, the UK will be out. For the sake of its own cohesion, the EU-27 cannot offer better terms than before to keep the UK in.

Holger Schmieding Macro Flash Download: :  BREXIT IMPACT ON EU: CONTAGION OR SALUTARY LESSON?
29.06.2016 EURO AREA CONFIDENCE SOFTENS ON EVE OF BREXIT VOTE

Euro area economic confidence weakened slightly in June in anticipation of a UK referendum that unex-pectedly saw Britons choosing to leave the European Union. The broad-based economic sentiment somewhat confirms the risks the narrower PMIs signalled already last weak.

Florian Hense Macro Flash Download: :  EURO AREA CONFIDENCE SOFTENS ON EVE OF BREXIT VOTE
28.06.2016 BREXBACK? PROBABLY NOT

Political turmoil in the UK, some soul-searching in the EU-27, a major but largely orderly re-pricing of fi-nancial assets, a plunge in Sterling, rating downgrades for the UK: so far, the impact of the UK vote to leave the EU is playing out like many observers including us had predicted in our “what if” risk scenarios ahead of the vote.

Holger Schmieding Macro Flash Download: :  BREXBACK? PROBABLY NOT
28.06.2016 AFTER THE BREXIT SHOCK

British regret? Over 3 million people sign an online petition to the UK parliament to discuss a second referendum. UK Labour Party leader Jeremy Corbyn faces a leadership challenge after his particularly lacklustre pro-EU campaign.

Holger Schmieding Macro Flash Download: :  AFTER THE BREXIT SHOCK
28.06.2016 SPAIN: POPULISTS LOSE VOTES BUT STALEMATE CONTINUES

Will Britain's shock vote to leave the UK embolden populists elsewhere in Europe? That has become the key question for Europe. The result of Spain's repeat election on Sunday shows no trace of such contagion effects.

Holger Schmieding Macro Flash Download: :  SPAIN: POPULISTS LOSE VOTES BUT STALEMATE CONTINUES
27.06.2016 BREXIT UPDATE: 5 QUESTIONS FOR THE COMING MONTHS

UK politics has fallen into crisis following the vote for Brexit last Thursday. The resulting uncertainty and market tensions could further dampen activity in the domestic economy in the near-term. Currently, there are more questions than answers. To discuss likely outcomes amid unprecedented uncertainty we focus on five key areas:

Kallum Pickering Macro Flash Download: :  BREXIT UPDATE: 5 QUESTIONS FOR THE COMING MONTHS
22.06.2016 After the Brexit vote: assessing the domino risks

Domino risks: In this report, we look at the tail risk that key Eurozone members may decide to leave the euro or that Sweden or Denmark may vote themselves out of the EU.

Holger Schmieding, Florian Hense Macro Views Download: :  After the Brexit vote: assessing the domino risks
21.06.2016 GERMAN COURT LEAVES EUROPE'S SAFETY NET INTACT

Europe dodges another bullet. In its final verdict on the ECB’s “all it takes“ OMT programme, Germany’s Constitutional Court today rejected the legal challenges against the Eurozone’s premier safety net. Although the court did so with some unease and placed some limits on potential Bundesbank participation, the verdict allows the OMT to serve its purpose if it ever has to be activated.

Holger Schmieding Macro Flash Download: :  GERMAN COURT LEAVES EUROPE'S SAFETY NET INTACT
20.06.2016 THE WEEK THAT COUNTS: UPDATE ON EUROPEAN RISKS

The week that counts has started. After a drubbing for Italy’s pro-European prime minister Renzi in local elections on 19 June, the German court verdict on the ECB's OMT programme on 21 June, the Brexit referendum on 23 June and the Spanish repeat elections on 26 June could make waves.

Holger Schmieding Macro Views Download: :  THE WEEK THAT COUNTS: UPDATE ON EUROPEAN RISKS
20.06.2016 NOTES ON EUROPE

After two generations, the process of European integration as we know it seems to have reached its limits. European integration has been a response to the wars that ravaged the continent until 1945 and to the protectionism that wrecked many economies in the inter-war years.

Holger Schmieding Macro Views Download: :  NOTES ON EUROPE
17.06.2016 The case against Brexit

Straight question, simple answer: Sometimes, the big decisions in life can be surprisingly simple. On 23 June, British voters will answer the question: do they want their country to stay in or leave the EU? To choose wisely,
they only need to look at a map.

Holger Schmieding, Kallum Pickering Chart of the Week Download: :  The case against Brexit
16.06.2016 Brexit update: UK polls now show small lead for “leave”

Brexit opinion polls now show “leave” marginally ahead: With 10 days to go until the UK’s “in” or “out” referendum on European Union (EU) membership, polls are showing a significant gain in support for “leave”, as
immigration has taken centre stage in the UK public debate.

Holger Schmieding, Kallum Pickering Macro Views Download: :  Brexit update: UK polls now show small lead for “leave”
16.06.2016 The Brexit Brief: our guide to the “what if”?

A serious shock. If UK voters decide on 23 June to leave the European Union, the UK and, to a lesser extent, Europe as a whole could plunge into a significant crisis. Markets would price in the risks, possibly overdoing it in a first knee-jerk reaction.

Holger Schmieding, Kallum Pickering Macro Views Download: :  The Brexit Brief: our guide to the “what if”?
10.06.2016 The Brexit risk: a domino effect across Europe?

What if? Could the precedent of a Brexit trigger domino effects across Europe, putting the cohesion of the European Union (EU) or the eurozone at serious risk? If the UK votes to leave the EU on 23 June, that would be the
main risk to watch for global markets and the global economy.

Holger Schmieding Chart of the Week Download: :  The Brexit risk: a domino effect across Europe?
08.06.2016 UK INDUSTRIAL PRODUCTION: FASTEST GROWTH IN ALMOST 4 YEARS

Total production increased by 2.0% mom in April, the biggest increase since July 2012. Growth was significantly above estimates of 0.0% and followed a 0.3% rise in March. On a 3m/3m basis, industrial production grew for the first time since last November, up by 0.7% in April. Manufacturing - the largest industrial sector - increased by 2.3% between March and April, its fastest rate of growth since July 2012.

Kallum Pickering Macro Flash Download: :  UK INDUSTRIAL PRODUCTION: FASTEST GROWTH IN ALMOST 4 YEARS
06.06.2016 BREXIT UPDATE: PUTTING RECENT POLL SHIFTS INTO CONTEXT

Has the Brexit risk risen? Probably not much. Opinion polls can be volatile. Even though our weighted average of online and telephone polls indicates the lowest level of support for ‘remain’ all year, analysis of the underlying poll trends does not point conclusively to a significantly higher Brexit risk.

Kallum Pickering Macro Flash Download: :  BREXIT UPDATE: PUTTING RECENT POLL SHIFTS INTO CONTEXT
06.06.2016 EUROPE: THE SIX-DAY CLUSTER OF RISKS

The German court verdict on the ECB's OMT programme on 21 June, the Brexit referendum on 23 June and the Spanish repeat elections on 26 June: Europe is heading for a six-day cluster of risks. We expect Europe to dodge the bullets again, as it has done so far.

Holger Schmieding Macro Views Download: :  EUROPE: THE SIX-DAY CLUSTER OF RISKS
03.06.2016 BREXIT UPDATE: THE ECONOMIC MYTHS THAT CONCEAL REALITY (CONTINUED)

Ahead of the UK’s ‘in or out’ European Union (EU) referendum on 23 June 2016, the debate about the costs and benefits of EU membership is often shrouded in myths rather than driven by facts. In a series of brief reports, we contrast such myths with reality.

In this analysis, we focus on the myths to which the debate has recently shifted: (1) the staple argument of the Leave campaign, EU migration and its effect on public services and housing, (2) Britain’s understanding of the European project, and (3) potential post-Brexit opportunities with the Commonwealth.

 

Kallum Pickering Macro Flash Download: :  BREXIT UPDATE: THE ECONOMIC MYTHS THAT CONCEAL REALITY (CONTINUED)
03.06.2016 UK UPDATE: CONSUMERS RESILIENT AMID SHARP RISE IN UNCERTAINTY AHEAD OF EU REFERENDUM

There are widespread signs across the UK economy that Brexit jitters are starting to bite and that growth has slowed in the run up to the EU referendum on 23 June. While consumers remain relatively upbeat, political uncertainty has risen to the highest level on record. Short of a Brexit, we expect growth to snap back in the second half of the year.

Kallum Pickering Macro Flash Download: :  UK UPDATE: CONSUMERS RESILIENT AMID SHARP RISE IN UNCERTAINTY AHEAD OF EU REFERENDUM
02.06.2016 ECB MAINTAINS DOVISH BIAS

Upon raising its projections for growth and inflation in 2016, the ECB maintained a decidedly dovish bias. While the ECB did not suggest at its press conference today that it may need to ease policy again, the ECB emphasised that it ‎is "willing, able and ready" to act if financial turmoil were to impair the transmission mechanism of monetary policy or if ultra-low inflation became too entrenched in inflation expectations.

Florian Hense Macro Flash Download: :  ECB MAINTAINS DOVISH BIAS
31.05.2016 ECB PREVIEW: A TASTE OF SUCCESS

The economy is expanding at a satisfactory clip, the hypothetical deflation threat has receded and none of the risks that had roiled markets early this year has materialised. At its meeting in Vienna this Thursday, the ECB Council will not need to take any major decision.

Holger Schmieding Macro Flash Download: :  ECB PREVIEW: A TASTE OF SUCCESS
30.05.2016 EUROZONE: DOMESTIC DEMAND DRIVES THE RECOVERY

Steady growth, more jobs, neither inflation nor deflation. While not exactly splendid, the outlook for the Eurozone economy is quite satisfactory. Supported by domestic demand, the Eurozone economy looks set to expand at a pace around its 1.6% trend rate later this year, in line with growth over the last five quarters.

Holger Schmieding Macro Flash Download: :  EUROZONE: DOMESTIC DEMAND DRIVES THE RECOVERY
27.05.2016 "Remain" edging ahead: Brexit risk falls to 30%

Recent trends indicate that the risk of the UK voting to leave the European Union on 23 June has fallen. We thus reduce our probability of a Brexit from 35% to 30%.

Kallum Pickering Macro Flash Download: :  "Remain" edging ahead: Brexit risk falls to 30%
27.05.2016 President Trump? A European perspective

Having spent a few days in the US after‎ travelling through Europe immediately before, we have been struck by a transatlantic gap in perceptions. In Europe, few people seem to believe that Donald Trump will be the next US president. In the US, however, many observers rate his chances of winning on 8 November at 40-45%.

Holger Schmieding, Kallum Pickering Chart of the Week Download: :  President Trump? A European perspective
26.05.2016 UK: MARKET TURMOIL AND BREXIT JITTERS HIT Q1 GDP GROWTH

The worst start to a year in financial markets since 2008 and heightened uncertainty over the UK’s fate in the EU damped growth momentum at the start of the year. Domestic demand provided all of the growth while trade dragged. The quarterly growth rate slowed to 0.4% in Q1 from 0.6% in Q4, in line with expectations.

Kallum Pickering Macro Flash Download: :  UK: MARKET TURMOIL AND BREXIT JITTERS HIT Q1 GDP GROWTH
25.05.2016 GERMAN IFO SHOWS CONTINUED EXPANSION

May’s Ifo business climate reading suggests the German economy continues its growth path at a robust pace. After stronger-than-expected growth in the first quarter of 2016, the expansion is likely to slow in Q2. The risk of a sharp drop-off in Q2, and the rest of the year, is limited, provided that the subdued growth of economic activity in the rest of the Eurozone does not weaken further.

Florian Hense Macro Flash Download: :  GERMAN IFO SHOWS CONTINUED EXPANSION
23.05.2016 The Euro Plus Monitor Spring 2016 Update

Once a year, Berenberg and the Lisbon Council examine the fundamental economic health and recent adjustment progress of 21 European economies. We published the last full set of results in The 2015 Euro Plus Monitor on 14 December 2015. In The Spring 2016 Update, we look only at the Adjustment Progress Indicator. In addition, we take advantage of recent data releases to update the rankings based on full data sets for 2015, including the second half of the year.

Holger Schmieding Macro Views Download: :  The Euro Plus Monitor Spring 2016 Update
20.05.2016 The risk in Spain

A left-left alliance between Podemos and the Socialists remains a risk. But disagreement about Catalonia makes it unlikely that the Socialists would accept such a coalition, especially as they could well be the junior partner.

Holger Schmieding Chart of the Week Download: :  The risk in Spain
18.05.2016 UK: LABOUR MARKET ADDS JOBS, WAGE GROWTH DIPS

The UK employment machine keeps on humming. Despite the market turmoil in Q1 and concerns about the Brexit referendum in Q2, UK firms continued to hire. The employment rate reached a record 74.2% in March after the economy added a further 44k jobs. The unemployment rate remained unchanged at 5.1% in March, in line with expectations and stable for the fourth consecutive month. Frustratingly, wage growth slowed despite the continued expansion in labour demand. Wage growth (ex bonuses) dipped to 2.1% yoy versus expectations of an acceleration to 2.3%, following growth of 2.2% in February.

Kallum Pickering Macro Flash Download: :  UK: LABOUR MARKET ADDS JOBS, WAGE GROWTH DIPS
17.05.2016 UK INFLATION – DROP IN AIR FARES REVERSES MARCH GAINS

Inflation unexpectedly slowed to 0.3% in April from 0.5% in March. A 14.2% mom decline in air fares stripped away the 0.1 ppt air fares added in March - when they jumped temporarily due to the early Easter.  Declines in the prices of clothing, vehicles and social housing rent also contributed to the drop in the headline rate. Core inflation, which strips out the volatile energy and food components dropped to 1.2% in April from 1.5% in March - versus expectations of 1.4%.

Kallum Pickering Macro Flash Download: :  UK INFLATION – DROP IN AIR FARES REVERSES MARCH GAINS
13.05.2016 UK households reverting to old habits: Is the recovery sustainable?

Consumer credit growth at a decade-high, saving at a record low. Should we worry? Probably not. Although households have not deleveraged as much as businesses - household debt as a percentage of GDP has fallen to 90% from its peak of 107% in 2009 – households’ ability to manage the debt has improved significantly. 

Kallum Pickering Chart of the Week Download: :  UK households reverting to old habits: Is the recovery sustainable?
12.05.2016 UK: BOE CAUTIOUS OF BREXIT RISKS – NEXT MOVE LIKELY UP

The MPC made no policy changes at its May meeting. The nine member committee voted unanimously in favour of keeping the bank rate at 0.5% and maintaining the stock of QE assets at £375 billion. 

Kallum Pickering Macro Flash Download: :  UK: BOE CAUTIOUS OF BREXIT RISKS – NEXT MOVE LIKELY UP
11.05.2016 UK INDUSTRIAL OUTPUT: THIRD SLUMP IN 8 YEARS

Hard times for UK production industries: Industrial output contracted by 0.4% qoq in Q1 2016. This follows a quarterly decline of 0.4% in Q4 2016. Manufacturing – the largest industrial sector - contracted by 0.5% qoq.

Kallum Pickering Macro Flash Download: :  UK INDUSTRIAL OUTPUT: THIRD SLUMP IN 8 YEARS
11.05.2016 THE ECONOMICS OF BREXIT: A GERMAN VIEW

We see a 35% risk of Brexit. The British ‘in or out’ EU referendum on 23 June poses the top economic and political risk for Europe this year. Germany would love the UK to stay in the European Union. The UK is simply part of Europe. Managing relations with the UK is much easier in the established framework of the EU than it would be on an awkward bilateral basis.

Holger Schmieding Macro Flash Download: :  THE ECONOMICS OF BREXIT: A GERMAN VIEW
09.05.2016 MACRO UPDATE: GREECE, FED, BREXIT CONTAGION RISKS, EUROZONE AND UK GDP

Last night, the Greek parliament approved a package of pension reforms and tax increases. The government managed to mobilise its majority of 153 out of 300 seats in parliament. 

Holger Schmieding Macro Flash Download: :  MACRO UPDATE: GREECE, FED, BREXIT CONTAGION RISKS, EUROZONE AND UK GDP
09.05.2016 UK: MAY INFLATION PREVIEW - LOOKING THROUGH THE BREXIT JITTERS

Whilst we expect some downward revisions to the current assessment of growth and some wariness by the MPC about the impact of Brexit uncertainty on domestic demand, we would not read too much into a dovish tone. We address these issues one by one as we discuss what to look for in the May Inflation Report on Thursday.

Kallum Pickering Macro Flash Download: :  UK: MAY INFLATION PREVIEW - LOOKING THROUGH THE BREXIT JITTERS
06.05.2016 Forecasts at a glance - Modest growth amid serious political risks

Outlook: Developed world continues to recover, emerging markets hit bottom
●   US: Consumption and housing solid, exports and investment weak
●   China: Decelerating growth but no hard landing
●   Japan: Struggling to grow, yen strength hurts
●   Eurozone: Modest but largely balanced recovery continues
●   UK: Moderate economic recovery continues, 35% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download: :  Forecasts at a glance - Modest growth amid serious political risks
06.05.2016 UK and Eurozone: mind the gap

Better off alone? Advocates of Brexit often claim that the UK would be better off if it detached itself more from an allegedly dysfunctional Eurozone and linked itself closer to faster-growing regions of the world instead. Strictly speaking, the assertion does not make sense.

Holger Schmieding, Kallum Pickering Chart of the Week Download: :  UK and Eurozone: mind the gap
05.05.2016 UK UPDATE: SERVICES PMI AT 3 YEAR LOW ON BREXIT JITTERS, NO NEED TO PANIC

The lowest reading for the UK services PMI since February 2013 makes for three in a row after construction and manufacturing indices also came in below expectations earlier in the week. The headline index for services was 52.3 in April, below the consensus of 53.5.

Kallum Pickering Macro Flash Download: :  UK UPDATE: SERVICES PMI AT 3 YEAR LOW ON BREXIT JITTERS, NO NEED TO PANIC
03.05.2016 Forecasts at a glance - Modest growth amid serious political risks

Outlook: Developed world continues to recover, emerging markets hit bottom
•      US: Sound fundamentals, domestic demand resilient but exports drag
•      China: Decelerating growth but no hard landing
•      Japan: Struggling to sustain growth, reforms needed
•      Eurozone: Modest but largely balanced recovery continues
•      UK: Moderate economic recovery continues, 35% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download: :  Forecasts at a glance - Modest growth amid serious political risks
29.04.2016 Brexit polls: beware of apples and oranges

Is the Brexit risk receding? The sterling exchange rate, bookmakers’ odds and opinion polls have moved that way in recent weeks. But the actual shift in opinion polls has been smaller than some of the press reports may suggest.

Kallum Pickering Chart of the Week Download: :  Brexit polls: beware of apples and oranges
29.04.2016 EUROZONE OUTLOOK: A FIRMER RECOVERY

Good news from the Eurozone. One by one, the pieces are falling into place. After a soft patch in the second half of 2015, the Eurozone is returning to trend growth of roughly 1.6% yoy.

Holger Schmieding Macro Flash Download: :  EUROZONE OUTLOOK: A FIRMER RECOVERY
28.04.2016 GERMAN LABOUR MARKET: SOLID TREND

Despite the recent drop in exports to China and other emerging markets, Germany continues to create ever more jobs. Strong gains in real disposable incomes and a fiscal stimulus of at least 0.5% of GDP for 2016 point to further gains ahead. In turn, solid employment growth will underpin consumer spending, helping to cushion the German economy somewhat against external shocks.

Holger Schmieding Macro Flash Download: :  GERMAN LABOUR MARKET: SOLID TREND
28.04.2016 What drives the UK current account deficit?

The UK current account deficit has widened sharply from an average of 2.3% of GDP between 2001 and 2010, to a record of 7.0% in Q4 2015. Two trends are behind this negative outcome.

Kallum Pickering UK Macro Update Download: :  What drives the UK current account deficit?
28.04.2016 THE POLITICS OF BREXIT: A GERMAN VIEW

For once, let me start with the disclaimer: I am a German who has spent half of his adult life in London. That may colour my perspective. I am amazed by the current German backlash against the ECB, the only central bank that has ever‎ delivered a prolonged period of price stability for Germany. In the same way, I am amazed by some English views of the European Union which also seem to be partly based on a somewhat peculiar interpretation of European facts. Let me offer a German-inspired view of the Brexit debate.

Holger Schmieding Macro Flash Download: :  THE POLITICS OF BREXIT: A GERMAN VIEW
27.04.2016 ECB POLICY IS WORKING AS CREDIT CYCLE TURNS UP GRADUALLY

Monetary policy is working in the Eurozone. While less effective than in the past, the ECB’s stimulus is yielding results. In March, credit growth in the Eurozone strengthened slightly further.

Holger Schmieding Macro Flash Download: :  ECB POLICY IS WORKING AS CREDIT CYCLE TURNS UP GRADUALLY
27.04.2016 UK GDP SLOWDOWN - NO CAUSE FOR CONCERN

GDP growth slowed from 0.6% qoq in Q4 to 0.4% qoq in Q1, in line with estimates. This is not a cause for concern. The slowdown was caused by largely idiosyncratic and transitory risks, namely the financial market rout at the start of the year and the forthcoming EU referendum on June 23.

Kallum Pickering Macro Flash Download: :  UK GDP SLOWDOWN - NO CAUSE FOR CONCERN
25.04.2016 UK: Obama signals Brexit could change the 'special relationship'

Pro-EU Prime Minister Cameron couldn’t have asked for more. On his visit to London, US President Obama plainly stated that he thought the UK should vote to stay in the EU, and that it would be in the interests of the UK, the EU and the US for the UK to do so.

Kallum Pickering Macro Flash Download: :  UK: Obama signals Brexit could change the 'special relationship'
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