Matthew Luzzetti

Robust, broad-based global expansion. Synchronised growth across regions and economies, in many cases at above-trend levels. We expect global growth to accelerate to +3.9% this year, marginally above 2017, as fundamentals remain supportive. We expect the US and eurozone to continue growing above potential, but do not anticipate any further acceleration. In China, we expect growth to slow, and are more worried about inflation and financial risks than consensus. 2018 should mark the peak of the current cyclical expansion; growth should decelerate from 2019. [more]

Inflation data over the past year – and especially over the past week – have highlighted a critical point. Fluctuations in inflation rates for items that are typically insensitive to the busi-ness cycle — which we refer to as acyclical, such as health care and apparel — can drive the overall inflation trajectory and lead to regime shifts in the market’s inflation narrative. The plunge in wireless telephone services prices last March, followed by a string of downside surprises to other acyclical items, spawned a narrative that structural disinflationary forces would prevent inflation from rising. In the same way, recent stronger inflation data led by acyclical items may have revived the narrative that the Phillips curve is, in fact, alive and well and that risks are tilted toward inflation overshooting the Fed’s target. [more]

After a stellar 2017 and an even stronger January, risk assets have undergone a sharp pullback in the last week. Initially triggered by higher rates as markets repriced inflation expectations higher, the episode evolved into a technical spout of volatility exacerbated by programmatic strategies. The pullback is healthy, after a highly unusual stretch of market tranquility. [more]

This edition reviews the global macro outlook, with 2018 likely marking the peak of the current cyclical expansion. Read on for our views on the US macro outlook and the Fed, the eurozone and the ECB, China’s macro outlook and risks. Find also a summary of our views on key themes as well as on the different asset classes and the main macro and markets forecasts [more]

Happy holidays. This is what market sentiment feels like at the moment, with risk assets at or close to multi-year highs. Faster progress on tax reform bills in the US and the EU-UK exit deal provided the last positive catalysts. They add to a favourable backdrop of strong economic growth, increasingly supportive fiscal and regulatory policy, and tightening but still easy monetary policy. [more]

Unlike the last few years, this summer was relatively quiet. As markets look ahead to the rest of the year, the key theme will continue to be the major central banks’ tentative progress toward removing monetary accommodation. Investors have so far not priced in this outlook. Since the prospects for growth across all the major countries is better than it has been for some time it remains a puzzle why there hasn't been a greater sell-off in bond markets. [more]

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. [more]

Global investors have recently been forced to sift through mixed signals from macro data and markets. Chief among these discordant messages is the apparent dichotomy between softer inflation, lower yields and flatter curves, and falling oil prices on the one hand, and still solid global growth and firm risk sentiment on the other hand. [more]