The global expansion has downshifted to a slower pace but remains resilient. We remain in the most aggressive and synchronized monetary tightening cycle in 40 years. Underlying inflation persists at multiple %age points above targets and central banks remain in tightening mode. In response to the U.S. CPI update for October, the 10-year-2-year yield spread […]
The Fed’s continuation of rate hikes in September to fight rising inflation, economic growth and geopolitical risk concerns, and a soaring US dollar combined to drive losses across all asset classes in Q3. During past inflationary environments, inflation came in waves. This time will be no different. As supply induced inflation begins to decline over […]
Despite sub-par global economy GDP growth this year, uncertainty around central bank policy paths continues to dominate markets. In September, Developed Markets continued to tighten, with their central banks (outside Japan) moving in unison with rate hikes, accompanied by guidance for further tightening ahead. This is a response to two closely related developments. First, central […]
On the heels of the pandemic, the world is now having to deal with spillovers from Russia’s war, which is threatening a recession not only in Europe but across the developed world, and China’s ad hoc lockdowns. Corresponding supply shocks are fueling inflation across the globe, prompting central banks to tighten monetary policy further into […]
The World Bank and the OECD have slashed their global growth expectations, citing the surge in energy and food prices, along with disruptions from the Ukrainian war and ongoing pandemic restrictions in China.1 While businesses are grappling with labor shortages and surging wage growth, consumer demand remains strong, and the persistence of very high price […]
Escalating geopolitical tensions related to uncertainty around the war in Ukraine and prolonged supply chain disruptions have shifted stagflation concerns towards recession, as the first quarter of 2022 in in U.S. experienced negative growth. The emergence of highly transmissible COVID-19 variants also continues to risk derailing the global economic recovery. Central banks are weighing aggressive […]
The economic recovery from the downturn caused by the coronavirus pandemic continues and multiple macro risks persist. Inflation due to supply shortages as well as fiscal spending, government debt, more hawkish central banks, and an uncertain labour market are afflicting developed economies around the world. The risk of a sharp slowdown in the coming months […]
The recent inflation surge is generating two challenges to the global expansion. The immediate one comes from a squeeze in household purchasing power, concentrated in Europe and low-income commodity importing nations. If growth stalls in the second half of the year, it will likely have negative repercussions for both growth and inflation. If growth proves […]
We have lowered our 2022 global GDP growth outlook following the invasion of Ukraine by Russia, one month ago. A commodity supply shock has pushed up CPI inflation expectations and contributed to a shift in our expectations regarding the timing and size central bank rate hikes. Our outlook focuses on the reflationary consequences of strong […]
Geopolitical escalation in February has materially increased the risk of further aggravating the energy and commodity crisis developing over the past 2 years. After weeks of rising tensions, Russia launched a full-scale invasion of Ukraine on February 24th. The U.S., in cooperation with its Western allies, has responded by imposing sanctions against Russia, prompting significant […]