Global Data Pod

Central banks continue to tighten aggressively with the DM moving aggressively and more muted action from EM central banks. But the pressure for more is there with labor markets having yet to show signs of easing and EM central banks leaning on FX intervention to limit their currency depreciation.

Speakers:

Bruce Kasman

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.

This week we downgraded the UK outlook but see scope for more policy support across Europe; conversely, better August activity data in China do not quell our concerns over COVID lockdowns and a weak real estate sector. Another 75bp move by the Fed headlines a busy upcoming week of central bank hiking. We now see the Fed’s policy rate reaching 4.25% early next year.

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.

While Europe remains the weakest link in the global outlook, rapidly rising natural gas inventories combined with continued large doses of fiscal support are tempering downside tail risks. Risks remain skewed to the downside in China. Against this backdrop, major DM central banks are on track to hike at the fastest pace this quarter since 1980. With the inflation threat still unvanquished, more hikes are to come.

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.

We are increasingly confident that the global economy will avoid a recession. This owes largely to improvements in the US where a resilient labor market looks set to combine with falling inflation to boost spending. By contrast, surging inflation in Europe—which surprised to the upside this week—is expected to spark a recession. And in China, headwinds are building and we lower the outlook. Against this backdrop, the Fed and ECB are still focused on getting rates above or at least back to neutral respectively.

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.

No mind tricks in Fed Chair Powell’s brief but forceful message that more restrictive policy is coming and the Fed will not prematurely reverse course. With another solid US jobs report expected next week, we see the Fed hiking 75bp in September. This week also saw us put a deeper recession and higher inflation into our Euro area outlook, whereas more fiscal support in China reduces the downside risks to growth there.

Speakers:

Michael Hanson

Daniel Silver

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.

This week’s data highlight regional divergences: US IP and retail sales were good, China’s domestic demand and real estate investment were not, and a surge in natural gas prices risks deeper downturns across Europe. Elevated inflation should keep DM central banks hiking further – we added 75bp to our BoE call for this year and look for Chair Powell to stress the Fed’s focus on getting inflation down at Jackson Hole next week.

Speakers:

Bruce Kasman

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.

July CPI readings signify that a significant slowing of global inflation momentum is underway, largely due to falling energy prices. Softer demand and easing supply pressures should help bring down core as well. But with natural gas prices surging, Europe may stand out with limited disinflation and a contraction by year-end.

Speakers:

Bruce Kasman

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.

Despite an onslaught of supply shocks, the global expansion looks to have continued through July. Risks remain elevated, as the July global PMIs this week showed a concerning loss of momentum across sectors and regions—including Asia. However, a huge upside surprise in US job gains suggests employers continue to expand. With recession risks having faded some and headline inflation set to slow sharply, the focus is now on how aggressive central banks will need to act to remove underlying price pressures.

Speakers:

Bruce Kasman

Joseph Lupton

This podcast was recorded on August 5, 2022.

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 Raphael Brun-Aguerre and Daniel Silver to discuss our inflation forecasts that see Euro area inflation remaining elevated in 2H22 in contrast to significant moderation in the US and many EM economies. High inflation, boosted by surging natural gas prices, plays a key role in our forecast for Western Europe to slide into a mild recession in 2H22 whereas easing commodity price inflation should boost household purchasing power elsewhere.

The July CPI reports likely mark the beginning of this phase of inflation divergence that also augurs a rotation toward weaker relative European growth. We now expect Euro area inflation to remain at a 9%ar this quarter, boosted significantly by upward pressure on energy and food prices. At the same time, we are expecting a large drop in US CPI energy to lower headline gains to 0.2-0.3%m/m. A moderation in food price pressures should be significant in holding EM CPI gains to 0.3-0.4%m/m in coming months‑‑half their average rate of increase in 1H22.

 

This podcast was recorded on August 3, 2022.

This communication is provided for information purposes only.  Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4157249-0   , www.jpmm.com/research/content/GPS-4161891-0   for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

The US contracted again last quarter, while the Euro area bounced more than expected. Central to our call that the US avoids recession is that businesses keep hiring (claims remain below 275k). However, we now see the Euro area slipping into a mild recession later this year. Both the Fed and ECB to keep hiking, though growth risks are making them more data-dependent.

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.