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The House View : Don’t dismiss inflation

April 25, 2017
Analyst:
Politics remain a key focus for markets, but the latest developments in Europe are positive. In France, the first round of the presidential election ruled out the least market-friendly ‎outcome, and although eurosceptic Marine Le Pen is in the run-off as expected, polls suggest reformist Macron should win. The snap election called in Britain for June is a material positive game-changer for Brexit negotiations. Beyond politics, focus has been on fading conviction in so-called Trump trades – higher inflation expectations and interest rates and buoyant risk assets – following speed bumps on the US domestic agenda and increased geopolitical tension. But with global macro momentum solid – though off recent highs – and global growth expected to pick-up next year and approach 4% in 2018, do not dismiss inflation risks, especially in the US. Indeed the macro backdrop comforts the view that we are past peak central bank easing. The Fed will likely raise rates twice more this year and announce the start of the unwind of its balance sheet. The ECB is on track to announce a taper of its quantitative easing programme later this year, but the tone at the April meeting should still be quite cautious. We have revisited our currency views. The snap UK election caused us to increase our sterling forecast but did not alter our medium-term bearish stance. We still expect the euro to break parity but the sequencing of the ECB's tightening policies is key: a shift toward rate rises rather than a withdrawal of quantitative easing would be bullish for the euro. In rates, we expect bond yields to climb beyond near-term election risk. In credit we expect the low default environment to persist. We see valid counters to the consensus view that European equities should outperform US equities. David Folkerts-Landau, Group Chief Economist Key pages this month: P6 French election updateP7 UK snap electionP10 Fading Trump tradesP11 Don’t dismiss inflationP19 Updated views on sterling and euro [more]

More documents about "International"

182 (37-48)
July 22, 2019
Analyst:
37
Facebook’s Libra project aims to establish both a private digital currency backed by a basket of hard currencies and a global payment network. It is thus challenging many established players in the financial system, including central banks, credit institutions and payment providers. Facebook can integrate Libra services into its digital platforms and benefit from strong network effects. In Europe, Libra would enter a competitive but fragmented digital payments market. As a currency, Libra will carry a foreign exchange risk for Europeans. But if the ECB drove interest rates deeply below zero, Libra could offer an easy digital way out. The flipside, though, would be a loss of sovereignty for Europe. [more]
July 10, 2019
38
The global 5G rollout has just begun, but behind the hype lies uncertainty and the potential for unintended consequences. This edition of Konzept seeks to answer many unresolved questions. First and foremost, we explain the tangible ways in which 5G will affect you, including the smartphone impact, the future of television, predictive maintenance, autonomous cars, smart cities and more. We also examine the geo-political disagreements, emerging market economics, and argue that the financial cost of distraction is greater than expected. [more]
July 2, 2019
Analyst:
40
By providing a high degree of privacy in payments, cash helps to slow the growing information asymmetry between consumers and companies as well as between citizens and public authorities. As knowledge about your counterparty is power, privacy is crucial for individuals to safeguard their position when dealing with organisations which are more powerful than a single person. [more]
June 25, 2019
Analyst:
41
For the first time ever the Fed is undertaking a thorough academic review of its policy strategy, tools, and communication practices. The reviewers are some 30 academic experts on monetary policy and macroeconomics. Listen to Peter Hooper, Global Head of Economic Research, discussing the background to the review, the low-rate monetary policy and what a downturn could mean for financial stability. [more]
May 15, 2019
47
Who pays when a tariff is imposed on an imported product? Formally, of course, it is the importer that is assessed the tariff. But if the exporter has lowered her price, the tariff-inclusive price may not be higher than the prevailing price before the tariff was introduced. [more]
May 8, 2019
48
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]
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