Econoday Unplugged

Global flash PMIs showed abrupt and severe slowing for services but sometimes surprisingly resilient results for manufacturing. And a clear positive for recovery is the extraordinary efforts by global central banks to cut rates, backstop loans, and print money to buy government bonds. Also stepping up have been national governments which are announcing major spending initiatives with the glaring exception, at least so far, of the US government.

National governments across the world are starting to follow their central banks with fiscal stimulus incorporating, in some cases, massive spending and support programs. Jeremy Hawkins and Mark Pender discuss the latest news and data including dislocations in the financial markets and global economy.

Fiscal stimulus increasingly appears to be the best if not only option to fight the economic effects from the coronavirus given that monetary action, with global interest rates below zero or approaching zero and after a decade of quantitative easing, appears to be spent. Jeremy Hawkins and Mark Pender discuss the outlook for economic policy amid the momentous developments playing out in the financial markets.

With monetary policy already limited by low to negative interest rates, fiscal policies such as tax cuts and new spending appear to be the next course to offset the effects of the coronavirus. Our panel discusses what options may or may not be available to global policy makers.

Rising concerns about the spreading Covid-19 virus have significantly boosted investor appetites for safe haven instruments. Jeremy Hawkins discusses what the latest data tell us about the economic impact so far and what to look out for over coming months.

Fourth-quarter data were flat to negative in Europe and Japan and hint at the need for further policy stimulus going into the coronavirus. Initial February data on US manufacturing show no ill effects at all from the virus in contrast to January data that were hit hard, not by the virus, but by the 737 shutdown.

Central banks, including the US Federal Reserve, aren't yet downgrading their outlooks, but the unfolding effects of the coronavirus on Chinese output may be raising the odds for another round of global rate cuts. Jeremy Hawkins and Mark Pender also discuss a rare plunge in European economic activity at year-end as well as the risk in Asia, where economies are seeking stimulus, of an emerging currency war.

Patience will be key when assessing the unfolding impact of the coronavirus on Asian economies, though initial indications have been moderate and not dramatic. Our panel also discusses US manufacturing, which appears to be accelerating though not all the data are favorable, and also the latest numbers from Europe and the UK where weakness is the trend.

The Federal Reserve is keeping rates steady and will continue, at least for the next few months, to add liquidity to the banking system which may be good news for US markets. For UK markets, the Bank of England still sees rates going up at some point but acknowledges it may yet have to cut if the hard data do not improve. Jeremy Hawkins and Mark Pender also discuss the market impact of the coronavirus and they round up the latest economic data, including strength in Eurozone economic sentiment and indicators in the US that are pointing to a strong employment report for January.

Global data are mixed, some improving, some not. Jeremy Hawkins pinpoints some possible surprises for Thursday's European Central Bank meeting and especially the Bank of England's meeting on the following Thursday where a sudden rate cut may be a possibility.