US Economics Update Fed will need to cut rates again before long The Fed’s promise to be “patient” is why we now forecast just one additional rate hike in the first half of this year, with the fed funds rate peaking at 2.50-2.75%. But we are increasingly confident... 18th January 2019 · 1 min read
US Economics Update Global slowdown adds to domestic headwinds Weaker global growth and the stronger dollar will cause a marked slowdown in US export growth this year. Alongside the domestic headwinds from the fading fiscal stimulus and tighter monetary policy... 16th January 2019 · 1 min read
US Economics Update Too soon to assume Fed will repeat 2016 climb-down There is a clear possibility that, as in early 2016, slowing global growth and further weakness in financial markets will prompt the Fed to abandon its plans to continue hiking interest rates. With... 9th January 2019 · 1 min read
US Economics Update Monetary Indicators Monitor (Nov.) The slowdown in narrow money growth to a 10-year low in November is nothing to fear because it mainly reflects a shift in the portfolio demand for money. With broad money and bank loans expanding at a... 9th January 2019 · 1 min read
US Economics Update Borrowing costs an increasing drag on investment The latest NFIB and JOLT surveys suggest that labour market conditions remain exceptionally tight, although higher interest rates are restraining business investment. 8th January 2019 · 1 min read
US Economics Update Trump, Powell and Mnuchin Firing Fed Chair Jerome Powell, even if President Donald Trump actually had the power to do so, would do little in practical terms to change the future course of monetary policy. Arguably the bigger... 8th January 2019 · 1 min read
US Economics Update Fed hikes, but less confident about future tightening The Fed hiked the fed funds target range by 25bp today, to between 2.25% and 2.50%, as most still expected, but tempered the move by slightly revising down Fed officials' projections for additional... 19th December 2018 · 1 min read
US Economics Update Budget dispute raises risk of debt ceiling crisis in 2019 A partial government shutdown this Friday would probably have only a modest impact on the economy. With the current gridlock only likely to intensify once the Democrats assume control of the House... 19th December 2018 · 1 min read
US Economics Update Domestic debt deleveraging continues The Fed’s latest Financial Accounts release shows that total domestic credit market debt fell back to a 12-year low of 326% of GDP in the third quarter, from a peak of 370% in early 2009. Admittedly... 7th December 2018 · 1 min read
US Economics Update What to make of the inverted yield curve The sharp flattening of the yield curve, which has now inverted between two and five years out, is consistent with our view that economic growth is set to slow significantly next year. We currently... 6th December 2018 · 1 min read
US Economics Update What would it take to convince the Fed to pause early? On balance, we still think that the Fed will raise rates twice in the opening six months of 2019, taking the fed funds target range to between 2.75% and 3.00%. The renewed weakness of core inflation... 3rd December 2018 · 1 min read
US Economics Update Trump less likely to back out of his own trade deal The trade ceasefire agreed by Presidents Donald Trump and Xi Jinping bears a striking resemblance to the ill-fated deal reached back in May but, with Trump himself having personally negotiated the... 3rd December 2018 · 1 min read
US Economics Update Monetary Indicators Monitor (Oct.) Narrow money growth continues to slow, but that is mainly due to rising interest rates, which have reduced the portfolio demand for money. The stronger pace of growth in both broad money and bank... 27th November 2018 · 1 min read
US Economics Update Durables consumption is the other shoe to drop In contrast to other rate-sensitive areas of spending, durable goods consumption has held up well in recent months, boosted by the tax cuts. Nevertheless, as the fiscal stimulus fades and interest... 20th November 2018 · 1 min read
US Economics Update Households well placed to withstand higher rates With debt servicing costs still low and delinquency rates stable, households’ debt burdens are unlikely to emerge as a source of trouble, even as rising interest rates cause economic growth to slow... 19th November 2018 · 1 min read
US Economics Update Weak loan demand points to slower GDP growth The Fed’s latest Senior Loan Officer Survey suggests that the stagnation in third-quarter business equipment investment was no one-off and that there are few signs of a turnaround in the slumping... 13th November 2018 · 1 min read
