Macro Pulse

A soft landing scenario for the world economy, driven by moderating global growth, and aided by disinflationary pressures, has remained the base case in financial markets in recent weeks. But investors have also been dancing to some political music in the US and Europe in recent days. In our charts this week we focus on:

·       The policy rate consensus

·       The US labour market

·       Euro area inflation

·       South Korea’s trade

·       Japan’s capital flows

·       UK economic performance

Growing concern about the economic ramifications from France’s upcoming election have been weighing on risk appetite in European financial markets in recent weeks. But the outlook for the broader world economy has also been arguably taking a turn for the worse. In our charts this week we look at:

·       European financial stress

·       European and global growth surprises

·       Global growth momentum

·       US growth and credit markets

·       Service sector inflation in advanced economies

·       Emerging market portfolio equity flows

Soft landing narratives have remained in vogue in financial markets in recent weeks, partly due to weaker-than-expected US inflation data. In contrast, this week’s stronger-than-expected UK service sector CPI inflation data unsettled investors and probably played a role in the Bank of England's decision to keep interest rates unchanged. In our charts this week we home in on:

·       US inflation surprises

·       Wage growth in the US and Europe

·       European political uncertainty

·       China’s property market

·       Japan’s trade

·       Global equity sector returns

A debate about the precise timing of a Fed rate cut has continued to dominate financial market sentiment in recent days. A nod from the Fed acknowledging progress in fighting inflation, coupled with weaker-than-expected CPI data, has, in particular, kept hopes of a soft landing for the US economy alive. In our charts this week we focus on:

·       US inflation

·       The UK economy

·       Consensus growth forecasts

·       The energy transition and climate change

·       China’s trade

·       The US dollar and global trade

A further batch of disappointing US growth data, coupled with policy rate cuts from the Bank of Canada and the European Central Bank, have continued to re-energize easing narratives in financial markets over the past few days. But politics has also been grabbing the headlines thanks to some unexpected election results from e.g. India and South Africa. In our charts this week we delve into:

·       Global household purchasing power

·       Policy uncertainty

·       Oil prices and global growth

·       US manufacturing activity and EM trade

·       Japan’s wage inflation

·       China’s NEV production

·       Consumer confidence in the US and Europe

·       Energy and consumer confidence

·       Broad money supply growth in the euro area

·       High frequency gauges of labour market activity

·       The UK’s net IIP position

·       China’s export growth in selected sectors

·         South Korean trade

·         European policy uncertainty

·         US and UK data surprises

·         UK inflation

·         Copper prices

·         Renewable energy use

A Fed easing narrative has been re-energized over the past few days largely thanks to a slightly weaker than expected US CPI report this week but, more generally, because of a battery of weaker-than-expected US data over the past couple of weeks. In our charts this week we examine the following:

·       Consensus growth expectations for 2024

·       GDP growth in advanced economies in  Q1

·       The German economy’s under-performance

·       A slowing UK labour market

·       US immigration

·       Global food price inflation

Last week's softer-than-expected US data releases have sparked renewed hopes that the Federal Reserve may initiate an easing cycle in the coming months, and, in doing so, have reignited investors' appetite for risk. This week, our charts explore the following:

·       The US economic outlook

·       US momentum versus RoW momentum

·       Global inflation surprises

·       Oil and US yields

·       Global supply chain pressures

·       Asian FX market performance

Lingering concerns about the US Fed's inclination to lower interest rates in coming months have continued to unsettle financial markets over the past few days. That said, comments from Fed Chair Powell after this week’s FOMC meeting have calmed some of those nerves. In our charts this week we delve into the following issues:

·         The latest Blue Chip consensus for policy rates

·         US growth surprises and 2-year yields

·         The euro and relative growth surprises

·         Japan’s retail sales activity

·         China’s aircraft movements

·         Water levels on the Panama Canal