Emerging Markets Economics Update Three reasons not to fear Fed balance sheet normalisation There are still plenty of unanswered questions about the Fed’s plans to reduce the size of its balance sheet, but there are at least three reasons to think that it won’t cause a major dislocation in... 25th May 2017 · 1 min read
US Economics Update Fed plans to begin balance sheet normalisation with baby steps The latest FOMC meeting minutes revealed that the Fed intends to gradually phase out the reinvestment of maturing securities in its portfolio. The upshot is that the balance sheet will shrink more... 24th May 2017 · 1 min read
Energy Data Response US Weekly Petroleum Status Report Crude oil stocks declined by the second largest amount so far this year, in spite of an increase in net imports. Gasoline and distillate inventories also fell, as demand for petroleum products surged. 24th May 2017 · 1 min read
US Housing Market Data Response Existing Home Sales (Apr.) The inventory of existing single-family homes for sale declined once again in April, and now stands at a 22-year low. That lack of supply contributed to a modest drop in home sales, despite some signs... 24th May 2017 · 1 min read
Global Markets Update Is low volatility in the Treasury market a bearish signal? There hasn’t been much action in the Treasury market since yields shot up last November after Donald Trump was elected US president. As is the case for the US stock market, though, low volatility... 24th May 2017 · 1 min read
US Economics Update Trump budget only an opening gambit The White House budget proposal for the 2018 fiscal year, which incorporates severe cuts to non-defence discretionary spending and entitlement spending, is never going to pass the Senate, which... 23rd May 2017 · 1 min read
US Housing Market Data Response New Home Sales (Apr.) New home sales recorded their largest monthly decline in over two years in April, reversing nearly all of the gains seen since the start of the year. Given the extremely low numbers of existing homes... 23rd May 2017 · 1 min read
US Economics Update How big a risk does a China slowdown pose to the US? The economic slowdown underway in China is perhaps the biggest external risk facing the US economy. However, growth would need to slow far more than we think is likely to knock the US recovery off... 22nd May 2017 · 1 min read
US Economics Weekly Is rising household debt a concern? The latest New York Fed report on consumer debt and credit made waves this week with the news that household debt surpassed its 2008 peak in dollar terms in the first quarter. But that is nothing to... 19th May 2017 · 1 min read
US Chart Pack Incoming data make the Fed’s job more difficult The latest decline in the core CPI inflation rate to 1.9% in April, at the same time as the unemployment rate dropped to a decade low of 4.4%, presents a dilemma for the Fed. The price stability part... 17th May 2017 · 1 min read
Energy Data Response US Weekly Petroleum Status Report US crude oil stocks fell for the sixth consecutive week as demand from refineries picked up. Inventories of gasoline and diesel also fell, despite demand remaining weak. 17th May 2017 · 1 min read
US Housing Market Update Why is confidence in the housing market relatively subdued? Survey evidence which points to relatively subdued levels of confidence in the housing market is not a sign that households are unduly worried about the prospect of rising interest rates. Rather, it... 17th May 2017 · 1 min read
US Economics Focus What explains the recent drop back in core inflation? The recent weakness in core CPI inflation in March and April has forced us to revise down our inflation forecasts for the next couple of years. Even if the recent drop in the price of cell phone plans... 16th May 2017 · 1 min read
US Data Response Industrial Production (Apr.) The bigger than expected 1.0% m/m surge in industrial production in April was mainly due to an encouraging 1.0% m/m gain in manufacturing output. (Consensus forecast was 0.4% m/m.) 16th May 2017 · 1 min read
US Housing Market Data Response Housing Starts (Apr.) Housing starts surprised on the downside in April, dropping by 2.6% m/m and taking starts back to where they were a year ago. While the building permit data suggest the chance of a recovery in May is... 16th May 2017 · 1 min read
Global Markets Update Will the hunt for yield soon be over? We think that the hunt for yield will end soon, as the available return on US Treasuries rises in response to tighter Fed policy than investors are anticipating. This probably wouldn’t result in the... 12th May 2017 · 1 min read
