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The House View : Taking a step back

July 25, 2017
As markets enter into the summer lull, it is useful to take a step back. The global economy is in better shape than it has been in several years. This has allowed other central banks to follow the Fed and gradually start their exit journey, a process that is a historic challenge given the unprecedented level of monetary accommodation. But with inflation still below target, a key part of the normalisation puzzle is still missing. Although labour market tightness has not yet fed to wages, and hence to inflation, we expect it will. Core inflation should move higher over the medium-term in the US and Europe, supporting further monetary tightening and a normalisation of yield curves. While no policy change is expected by the Fed on 26-July, an announcement to begin phasing out its balance sheet reinvestment is likely in September and we expect another rate hike in December. As for the ECB, rate hikes are still far off, and we expect the central bank to announce another QE extension and tapering in October. Our global macro outlook is little changed this year. We expect growth to rebound from the slowest pace post-crisis in 2016, though relative to consensus we are more positive on the US and more bearish on Japan. In China, we continue to expect a gradual deceleration, but see upside risks to growth in the second half of the year. We are generally constructive on risk assets, expecting material upside to US equities in the next 18 months and positive but more balanced performance in EM. There are signs the dollar has peaked, but we do not expect a material devaluation yet. We are more positive on the euro, seeing upside versus the dollar and sterling. We expect yield curves to normalise gradually, but there is risk of a more sudden upward shift, depending on the path of core inflation. David Folkerts-Landau, Group Chief Economist Key pages this month: P6 Global economy in a better place P8 Central banks overview P11 Current low inflation regime vs. 1960s and 1980s P17 Signs of dollar top You can access a two-page update of Deutsche Bank Research's views on global macro, monetary policy and markets, as well as some of the key themes driving them, at any time by downloading The House View Snapshot from: houseview.research.db.com. [more]

More documents about "International"

160 (25-36)
May 15, 2019
25
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May 8, 2019
26
China's USD 12-trillion stock market is a vast and complicated panoply of different share types across a wide variety of markets, exchanges and share classes. With the rising role of A-shares amongst international emerging markets (EM) indices, understanding the market dynamics of China's equity markets will be increasingly critical, as Chinese equities are set to become an increasing proportion of the global opportunity set, driven by their increasing role in EM equities. Deutsche Bank’s research team looks at the distinguishing features of China's onshore and offshore markets. [more]
April 11, 2019
28
This edition reviews recent market moves and outlines Deutsche Bank Research's key views going forward. Read on for our recap of the global macro outlook, key recent/upcoming political developments (Brexit, trade war, EU politics etc.) and major risks in 2019. Also, find our views on the Fed, the ECB, and all major asset classes. [more]
April 4, 2019
Analyst:
30
April 1 marked an important milestone for China’s financial markets, as Chinese Yuan-denominated bonds are to be included in the Bloomberg Barclays Global Aggregate Bond Index. According to Bloomberg, the index will include over 360 eligible bonds, with a c.6% weight, making it the fourth-largest currency component in the index, after the USD, the EUR and the JPY, and the inclusion will take place over a 20-month period. [more]
March 26, 2019
31
In the competition for global leadership in technologies like artificial intelligence, most observers see a two-horse race – between China and the United States. But what about Europe? Can it ever catch up to the galloping favorites? It won’t be easy. The digital economy in the United States has big advantages: a large domestic market, a risk-taking investment culture, and plenty of innovative companies and world-class universities. US tech giants were first-movers out of the gates, and used the network effects of the platform economy to dominate not only the US, but many other markets worldwide. [more]
January 17, 2019
34
Many investors think of themselves as apolitical, however, recent market turbulence has reinforced just how much politics can affect business and finance. This issue of Konzept offers incisive opinion on some pressing political issues, including the trade war between China and the US, next year’s US presidential election, European populism, technology regulation, Brexit, and more. We also examine how the latest developments in artificial intelligence and machine learning are helping investors forecast the market impact of political events. [more]
December 14, 2018
Analyst:
36
Ahead of and during the UN Climate Summit at Katowice, the usual warnings were heard, saying that a reduction in global carbon emissions was urgently necessary. However, these political calls are much too vague. Instead, the most inconvenient message remains unsaid: The technologies which are available today and in the foreseeable future will, in all probability, prove insufficient to counteract climate change to the necessary extent and with the necessary speed and, at the same time, allow households to stick to their consumption patterns and continue with the well-established division of labour along international production chains. [more]
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