A week of data that trims both downside risks on growth and upside risks on inflation are giving a bid to Goldilocks. As we noted in recent weeks, don’t fight the cyclical sweet spot we are entering. While Europe is the weak link, the US stands out this week with strong 2Q GDP and solid consumer spending in June. The Fed and ECB hike but turn data dependent, while the BoJ loosened its YCC.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Nora Szentivanyi and Michael Hanson discuss the latest global inflation developments and how the incoming data are shaping our views. In  this month’s edition we highlight  our recent research on the likely impact from El Niño and our forecast for US core inflation to prove sticky around 3%. 

Speakers

Michael Hanson, Economic and Policy Research

This podcast was recorded on 25 July 2023

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4469084-0, https://www.jpmm.com/research/content/GPS-4461348-0, https://www.jpmm.com/research/content/GPS-4454302-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

There is much to debate about whether global expansion will come to an end around the turn of the year, later next year, or even later (Goldilocks). Regardless, the near-term picture is looking more resilient and if so, a turn back up in the goods sector should help offset some moderation in service sector. Next week’s flash July PMIs will be key to watch, as will be the guidance coming out of the Fed, ECB, and BoJ.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

The "Debatable" series provides a window on the discussions taking place within J.P. Morgan economic research on key issues in the outlook. Here Malcolm Barr moderates as Bruce Kasman argues the case for inflation to remain problematically elevated relative to central bank targets, while Joe Lupton and Nora Szentivanyi argue that the recent inflation is surge is transitory and the policy actions already taken will push inflation back into central banks' comfort zones.

This podcast was recorded on 18 July 2023.

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

June reports suggest that core inflation is now moving lower and risks to our forecast – that core inflation decelerates from a 5%ar in 1H23 to a 3.7%ar this quarter – are shifting to the downside. Much of the near-term downward pressure is coming from core goods inflation. The delayed unwind of supply chain price pressure appears to have taken hold and is combining with the disinflationary impulse associated with manufacturing sector weakness and falling China export prices.

Speakers:

Bruce Kasman

Nora Szentivanyi

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

The service sector remains a growth engine at midyear, despite clear signs that normalization lift is beginning to fade. With manufacturing survey still pointing to weakness, this engine will need to continue to be the primary source of global growth this quarter.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Speakers:

Michael Feroli, Economic Research

Samantha Azzarello, Global Research

This podcast was recorded on July 7, 2023.

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Nora Szentivanyi and Joseph Lupton take stock of the rise in household (and overall private sector) debt service ratios in the wake of the sharp rise in interest rates since 2021-22 and discuss what to expect from here. While the projected increases in DSRs this year look manageable on the whole, there is significant variation across countries: the most interest rate-sensitive are seeing a faster pass-through; differences in leverage and the size of rate hikes also matter. Whereas many in DM have yet to see a significant rise in DSRs, the bulk of EM’s rise is likely behind us as EM central banks started hiking earlier and are already shifting towards rate cuts even as DM remains in tightening mode.

Speakers:

Nora Szentivanyi, Global Economic Research

Joseph Lupton, Global Economic Research

This podcast was recorded on July 6, 2023.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4444911-0, www.jpmm.com/research/content/GPS-4446781-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

While our modal views on the global outlook are not changing much, risks of imminent recession are fading and the likelihood of an intra-cycle lift should not be ignored. The goods sector is most primed for a bounce in this case, but the fate of the medium-term outlook will rest more on service sector normalization and the broader sensitivities to past policy tightening.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Nora Szentivanyi and Raphael Brun-Aguerre discuss the latest global inflation developments and how the incoming data are shaping our views.

This podcast was recorded on June 28, 2023.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4447959-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.