Global Data Pod

While not overreacting to one month of data, a welcome deceleration in US inflation this week points to both a consumer that is set for a marked improvement in purchasing power growth as well as a Fed that can slow its pace of hikes and eventually conclude by early next year. We maintain that recession risks are more of a concern for 2H23 rather than coming quarters, but recent indications of a sharp tightening in bank lending conditions raises some concern. China also remains a downside risk.

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. © 2022 JPMorgan Chase & Co. All rights reserved.

The latest PMIs are consistent with the global economy settling back to the lackluster pace of growth is has averaged this year, but the momentum-loss is a concern even if tempered by further signs of ongoing strength in labor markets. The Fed pivoted but in the hawkish direction this week as did ECB rhetoric, while a more nuanced message is coming from other central banks.

Speakers:

Joseph Lupton

Michael Hanson

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 is joined by Katherine Marney to discuss the recently launched EM capital flows monitor, a new tool for tracking and nowcasting capital flows in Emerging Markets EM capital flows have become more diversified in the last ten years. FDI and loans carry more weight. Portfolio flows have weakened. Resident flows have become as large as non-resident flows. This is starkly different from the pre-2013 era, when resident outflows were small and capital flow dynamics were largely driven by foreign portfolio flows.

 

This podcast was recorded on October 31, 2022.

This communication is provided for information purposes only.  Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4237103-0, https://www.jpmm.com/research/content/GPS-4247869-0.pdf, https://www.jpmm.com/research/content/GPS-4120737-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

A macro pivot is underway with US and China GDP having bounced back last quarter after contracting in 1H, and with Europe now sliding into a recession this quarter. However, inflation remains high and surprising to the upside in both the US and Europe, tempering any chance of a material central bank pivot. Next week, we expect more hikes from the Fed, BoE, Norges, and RBA. If our forecasts are right, the global hiking cycle comes to an end by 1Q23. But this will require a significant moderation in inflation.

Speakers:

Joseph Lupton

Michael Hanson

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 is joined by Mike Feroli, Greg Fuzesi and Jose Cerveira to discuss recent trends in inflation expectation surveys across the US, Euro area and CE-3, and what these mean for monetary policy outlooks.

While longer-term consumer inflation expectations have generally not become unmoored, short-term measures have been more elevated of late. Even as global headline inflation has moderated in recent months, underlying pressures remain intense. A particular concern is that elevated inflation could get embedded into wage- and price-setting behavior, making it much more challenging—and ultimately more costly—to return inflation to target.

The amount of economic pain needed to get inflation back down to central bank targets varies by country and region, but a painless disinflation is unlikely anywhere. The large shocks working their way through economies are not yet giving a clear sense of where inflation will ultimately settle. Survey measures of price and household income expectations, as well as actual pricing decisions by corporates will thus be important to track, with large impacts on the outlook for monetary policy.

 

This podcast was recorded on Oct 24, 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at

https://www.jpmm.com/research/content/GPS-4225276-0

https://www.jpmm.com/research/content/GPS-4221745-0

https://www.jpmm.com/research/content/GPS-4154366-0

https://www.jpmm.com/research/content/GPS-4228631-0

https://www.jpmm.com/research/content/GPS-4223938-0 

 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Global policy rates outside China/Turkey are up over 300bp in the past year. Beyond the direct impact of higher borrowing costs on growth, the risks are that something breaks in the financial system. From the GFC to the Taper Tantrum, central banks have learned a lot and the rapid response to the pandemic was a case in point. But the UK flap is also a reminder that there are unknown unknowns to worry about. For now, central banks are focused in inflation—to be underscored by next week’s expected 75bp ECB hike and even a possible shift in tone from the 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. © 2022 JPMorgan Chase & Co. All rights reserved.

Featured in this podcast are Ayako Fujita, Benjamin Shatil and Yuka Mera. We expect the BoJ to adjust its YCC policy in March next year, Kuroda’s last meeting before the end of his term, alongside broadening inflation momentum. But until that time, policy faces a tension between maintaining a functioning JGB market and limiting the impact of dovish monetary policy on currency stability. We do not expect the BoJ to provide any advance signal ahead of tweaking policy, but think every meeting from hereon is probably live. We do not expect a change at the October meeting, but nor is it a zero-probability event.

This podcast was recorded on Oct 21, 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at https://jpmorganmarkets.com/research/content/GPS-4231649-0, https://jpmorganmarkets.com/research/content/GPS-4223217-0 and https://jpmorganmarkets.com/research/content/GPS-4217274-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Recession risks abound and the mood at this week’s IMF meetings in Washington D.C. was downbeat as people expect central banks to keep pressing the break until something actually breaks in the expansion. But timing matters and the near-term drop in headline inflation is pointing to resiliency more so than fragility. While financial tightening risks morphing into outright stress in areas that are hard to foresee, the biggest risk remains a central-bank induced recession that takes shape much further down the road (like 12-18 months from now).

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. © 2022 JPMorgan Chase & Co. All rights reserved.

The latest surveys for September show the global expansion slowing but continuing. In the US, strong job growth (albeit a moderation) makes the case for a 75bp hike at the next Fed meeting.

Speakers: 

Bruce Kasman

Joseph Lupton

This podcast was recorded on October 7, 2022.

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

Turmoil in UK markets this week raises the specter of broadening financial stress beyond its shores. We fade this concern owing to the lack of imbalances that tend to amplify such shocks. However, those same strong fundamentals keep us focused on the key threat to the global expansion: central banks that need to press the breaks a lot more than anticipated.

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. © 2022 JPMorgan Chase & Co. All rights reserved.