Blog - Capital Economics

The Chief Economist’s Note

Global growth is about to slow – understanding why is key

Posted by Neil Shearing | Category : The Chief Economist's Note.

Last week saw a flurry of second quarter GDP releases covering economies from Korea to Mexico and the US to the euro-zone. In many ways the data are already old news – they cover a period that started when many economies were still in lockdown and ended before the rapid spread of the Delta variant … Continue reading “Global growth is about to slow – understanding why is key”

China’s looming slowdown isn’t cause for global panic stations

Posted by Neil Shearing | Category : The Chief Economist's Note.

There’s no shortage of issues to keep investors awake at night, but some concerns have more cause than others. The threat posed by the Delta variant shook markets at the start of last week for good reason – disruptions triggered by a major surge in cases is a key downside risk to our generally sanguine … Continue reading “China’s looming slowdown isn’t cause for global panic stations”

Delta variant a reminder that COVID is here for the long haul

Posted by Neil Shearing | Category : The Chief Economist's Note.

In England, the long-awaited day when most official social distancing rules ended dawned with the UK government’s most senior ministers self-isolating. This extraordinary situation reflects the virulence of the Delta strain; it’s now driving a renewed rise in infections worldwide and fuelling concerns about whether recoveries underway in many economies will be derailed. The honest … Continue reading “Delta variant a reminder that COVID is here for the long haul”

A world of shifting central bank frameworks is a riskier one for markets

Posted by Neil Shearing | Category : The Chief Economist's Note.

Anticipating policy shifts by central banks has never been easy but recent developments suggest it’s about to get more difficult – with potentially big implications for asset markets.  For the past couple of decades, central banks have set monetary policy in accordance with either an explicit or implicit target for inflation. The intellectual thrust of … Continue reading “A world of shifting central bank frameworks is a riskier one for markets”

The end of the beginning for supply shortages?

Posted by Neil Shearing | Category : The Chief Economist's Note.

One source of inflation concern over the past six months has been the growing evidence of supply shortages in key goods markets. These shortages have affected everything from semiconductors to household appliances, and they have fuelled fears that increases in consumer goods prices will follow.  At the heart of the problem has been the enormous … Continue reading “The end of the beginning for supply shortages?”

As crisis turns to recovery, governments must ease the burden on central banks

Posted by Neil Shearing | Category : The Chief Economist's Note.

It is now accepted wisdom that in times of crisis fiscal policy should work hand-in-glove with monetary policy to deliver support to the economy. In the depths of the COVID crisis this meant huge fiscal relaxations in advanced economies being effectively financed by asset purchases by central banks. This cushioned the collapse in activity and … Continue reading “As crisis turns to recovery, governments must ease the burden on central banks”

They may look similar, but US and European labour markets are on different paths

Posted by Neil Shearing | Category : The Chief Economist's Note.

The US and Europe adopted very different approaches to providing labour market support during the pandemic but as their economies re-open they appear to be experiencing similar problems: worker shortages, a growing number of unfilled vacancies and wage pressures in some sectors. What’s going on?  Let’s start with the labour market support programmes themselves. The … Continue reading “They may look similar, but US and European labour markets are on different paths”

The “rebirth” of inflation: will the pandemic give way to new inflationary era?

Posted by Neil Shearing | Category : The Chief Economist's Note.

Concerns about inflation remain front and centre of investors’ minds and seem likely to dash hopes of a quiet summer. The most immediate concern is the extent to which inflation will rebound as economies “reopen”. This will be influenced by several factors, including the relative speed at which demand recovers and supply is restored, the … Continue reading “The “rebirth” of inflation: will the pandemic give way to new inflationary era?”

Global inflation outlook more complicated than polarised debate suggests

Posted by Neil Shearing | Category : The Chief Economist's Note.

It sometimes feels as though there is little more to be said about the outlook for inflation, such has been the volume of ink spilt on the subject in recent weeks. However, much of the discussion has tended to miss important nuances in the situation faced by different countries. Two points are worth keeping in … Continue reading “Global inflation outlook more complicated than polarised debate suggests”

How macroeconomics will drive FX markets coming out of the pandemic

Posted by Neil Shearing | Category : The Chief Economist's Note.

Our new FX Markets service, which we launched last week, brings a fresh approach to analysing currency markets by looking at them through a macro lens.  Currency markets are notoriously difficult to forecast. This is partly because of the need to anticipate moves on both sides of the exchange rate. For example, forecasting moves in … Continue reading “How macroeconomics will drive FX markets coming out of the pandemic”