US Economics Update Fed shouldn’t respond to lower inflation expectations Since the recent fall in US inflation expectations is solely being driven by the decline in oil prices, it won’t prevent the Fed from ending QE3 or raising interest rates next year. 20th October 2014 · 1 min read
Canada Data Response Consumer Price Index (Sep.) Recent market events, most notably the slump in world oil prices, will keep core inflation in Canada well within the policy target range over the coming months. Accordingly, we expect the Bank of... 17th October 2014 · 1 min read
Global Economics Update Lower oil prices to have bigger implications for ECB than Fed The recent drop in oil prices is widely assumed to have strengthened the case for monetary policy remaining looser for longer. However, while we think it may encourage the ECB to loosen monetary... 17th October 2014 · 1 min read
US Data Response Uni. of Mich. Consumer Confidence (Oct.) The rise in consumer confidence to a seven-year high in October is another indication that the US economic outlook remains strong. That said, the preliminary survey results pre-date the recent equity... 17th October 2014 · 1 min read
US Economics Weekly Market moves leave Fed with a tricky balancing act The recent market moves could help the Fed to hit the employment part of its dual mandate but will take it further away from its inflation target. While we don’t think this necessarily means that a... 17th October 2014 · 1 min read
US Data Response Housing Starts (Sep.) The rise in housing starts in September continued the recent volatile pattern whereby a decline in one month has been followed by an increase in the next. But while there has been little underlying... 17th October 2014 · 1 min read
Canada Data Response Survey of Manufacturing (Aug.) The large drop in manufacturing sales volumes in August supports our more conservative view that the economy continued to struggle in that month. If anything, the risks to our below-consensus estimate... 16th October 2014 · 1 min read
US Housing Market Update Higher mortgage fees don’t point to future mortgage stress Mortgage fees and charges, whether guarantee fees, mortgage insurance premiums or origination points, have increased in recent years. But fees are not weighing significantly on buyer demand and do not... 16th October 2014 · 1 min read
US Data Response Industrial Production (Sep.) & Philly Fed (Oct.) The 1.0% m/m surge in industrial production in September and the very modest decline in October's Philly Fed regional manufacturing index are helpful reminders that the slowdowns evident in China and... 16th October 2014 · 1 min read
Bank of Canada Watch Bank sitting on the fence At next week's policy meeting we expect the Bank of Canada to remain neutral on the direction and timing of the next move in its policy rate. Although core inflation has rebounded sooner than the Bank... 15th October 2014 · 1 min read
US Economics Update Market moves hard to square with solid economic fundamentals The growing sense of market panic evident in the sharp declines in equity prices and the strong rally in US Treasury bonds over the past week is hard to square with the solid outlook for US economic... 15th October 2014 · 1 min read
US Data Response Retail Sales (Sep.), Empire State (Oct.) & PPI (Sep.) The weak tone of the latest retail sales, manufacturing and PPI data is the first real sign that the stronger dollar and the global slowdown are taking their toll on the domestic economy. But it’s... 15th October 2014 · 1 min read
Global Economic Outlook Euro-zone holding back recovery (again) Global growth is likely to accelerate slightly next year but to remain well below its pre-crisis average. Strong recoveries in the US and UK will be offset by near-stagnation in the eurozone and Japan... 15th October 2014 · 1 min read
US Economics Update Small businesses struggle in September As it is consistent with slower investment growth, lower inflation and a rise in the unemployment rate, the NFIB’s latest survey of small firms bolsters the case of the doves at the Fed. 14th October 2014 · 1 min read
Global Markets Update Will Treasury and Bund yields continue to diverge? Although the spread between the yields of 10-year US Treasuries and German Bunds is already close to its largest since the start of European Monetary Union, we see little reason why it should not... 14th October 2014 · 1 min read
Global Economics Update Can US and euro-zone inflation really diverge? It would be unusual for inflation pressures to be building in some advanced economies and falling in others. Nonetheless, this is exactly what we expect to happen in the next year or two, as US... 13th October 2014 · 1 min read
