Indicators of the strength of the Covid-19 pandemic have continued to rise around the world. With the resurgence of the epidemic in many countries, the gradual tightening of health measures has affected individual mobility...
In recent months, purchasing managers in the euro area and the US have reported a significant increase in input prices as well as longer delivery lags. They reflect the next stage of the disruptive impact of the pandemic with supply struggling to meet the pick-up in demand. According to an Atlanta Fed survey, firms experiencing the most intense disruption tend to be those with the highest expectation of future inflation. It remains to be seen whether this will convince them to raise prices. The Federal Reserve is relaxed about this but, nevertheless, there will be lot of nail-biting in the second half of the year as US inflation data are released in an economy that should be able to close its output gap quickly.
According to data from Johns Hopkins University, the number of Covid-19 cases worldwide continues to rise. In spite of a poor health environment, the OECD Weekly Tracker of year-on-year GDP growth continues to improve. This indicator is based on Google Trends resulting from queries on consumption, the labour market, housing, industrial activity as well as uncertainty...
A deterioration in the health situation is once again affecting consumer behaviour in certain European countries. According to the latest Google Mobility Report, visits to retail and recreation facilities have seen divergent trends in the main developed economies. In Italy, France and Belgium, where the number of Covid-19 cases has been rising again, footfall has fallen...
Based on an overview of the functions of a currency, cryptocurrencies should be considered as an investment instrument, rather than as an alternative to fiat money. Since the start of 2020, correlations between bitcoin and copper, equities and, in particular, breakeven inflation have increased. Probably, investors turn to bitcoin when inflation expectations are on the rise. Swings in investor sentiment also play a role. The extent of the change in the bitcoin price suggests that speculative waves are at work, driven by momentum buying and extrapolative expectations of price appreciation
The downward trend of our uncertainty indicators continues. This is related to the improvement of the sanitary situation in several countries, the vaccination campaigns and the anticipation of a major fiscal stimulus package in the US...
As the number of Covid-19 cases has been rising globally over the past two weeks, many countries have now joined the vaccination campaign that began in earnest in December 2020. According to the latest figures on Oxford University’s Our World in Data website, 319.56 million doses of vaccine have now been administered in 118 countries...
In the manufacturing sector, at the world level, the PMI recorded an improvement in February after having eased the month before. It is now at the highest level of the period under review. This also applies to the eurozone, where the index saw a big jump in February. The improvement in the French index was even more impressive, although its level is still below that of the eurozone...
The latest Google Mobility Report, of 1 March, revealed trends in visits to retail and recreation in the main European countries, Japan and the United States. Over the month, the indicator jumped from -60% to -45% in Germany, from -46% to -33% in Belgium and from -51% to -42% in Spain ...
The latest Google Mobility Report published on 23 February paints an encouraging picture of store footfall and visits to recreational facilities around the world, especially in Europe...
Retail and leisure traffic flows are increasing in some countries and declining in others according to the Google Mobility Report released on 14 February.
World merchandise trade has recovered much quicker from the steep fall at the outbreak of the Covid-19 pandemic than anticipated. In March and April 2020, at the height of the crisis, trade was almost 20% lower than a year earlier. Despite the continuation of the lockdown restrictions and distancing rules in large parts of the industrial world, world trade has continued to expand. In November 2020 (latest data available), merchandise trade was back at the level at the end of 2019. After the financial crisis in 2008, it took more than two years for trade in goods to return to the pre-crisis level. The reason for the quick recovery in goods trade is due to the special nature of the shock, which affected in particular services such as retail trade and the catering industry
The World composite purchasing managers’ index has been in a narrow range since August last year. At 52.3, it is still comfortably above the 50 mark, although it has been trending down since the peak of 53.3 reached in October. However, the dynamics at the country level are very heterogeneous...
The rollout of the vaccination process is vital for the economies to go back to normal again. According to the latest figures available on Oxford University’s Our World in Data website, 152 million doses of Covid-19 vaccines were administered in 73 countries, adding 72 million doses and 9 countries up to 10 February...
According to the Google Mobility Report of 2 February, visits to retail and recreation have picked up in some countries and stabilised in others. France, Italy, Belgium and the UK saw a recovery during the final week of January, with respective increases in the 7-day moving average to 40%, 43%, 45% and 63% below the baseline...
The biggest world-wide vaccination campaign in history began in 2020 Q4. According to the latest figures, released by Our World in Data on 27 January, more than 80 million doses have been given in 66 countries.
The effect of the restrictions can be seen in the latest Google Mobility Report, published on 19 January, which summarises customer traffic for a large number of countries, using multiple indicators. The Google mobility indicator shows a significant fall in visits to retail and recreation outlets, although less than seen last spring in most countries...
Yields on US Treasuries and German Bunds tend to be highly correlated but since the end of August, Bund yields have been essentially stable whereas treasury yields have increased.This spread widening is explained by a rising real rate differential, to a large degree due to a decline in German real yields. This could reflect a more gloomy view of bond investors about the growth outlook in Germany and, by extension, the Eurozone. Another, more likely, interpretation is that the real rate risk premium has declined in Germany due to the asset purchases of the ECB. In such case, investors will become increasingly nervous about the prospect that in a post-pandemic world the ECB will eventually have to stop the net purchases under its PEPP.
The latest readings of our indicators show a decline of uncertainty. Starting top left and moving clockwise, the decline of the media coverage based indicator continues but momentum is slowing and the level remains high. This is unsurprising given the newsflow on new infections. Uncertainty based on company surveys has recently declined somewhat in Germany but, again, the level remains very high. The same applies to the US with respect to sales revenue growth expectations...
Faced with the resurgence of the pandemic and the discovery of a new, highly contagious variant of the coronavirus, many countries have imposed strict or partial lockdowns to curb the progression of the virus. As a result, there has been a sharp drop in the momentum of retail and leisure traffic flows during the first week of January, as shown by the latest Google Mobility Report dated 10 January...
It is quite likely that, going forward, fighting recessions will be the remit of governments with central banks facilitating this task by creating cheap financing conditions. As a consequence, public indebtedness may very well remain high.One should wonder whether this could end up having negative consequences. A possible transmission channel is the pricing of government debt via a sovereign risk premium. Another factor can also play a role. Since 2015, when German bond yields increased, the rise in Italian yields has been even bigger -so the spread widens- whereas French yields has increased in line with German yields
In order to get a feel about how the Covid-19 pandemic has influenced activity in 2020, it is sufficient to look at one single chart, the composite PMI. Data plunged globally in March and troughed at very low levels in April. The third quarter saw strong activity with readings above the crucial 50 level in most countries. Under the influence of a new wave of infections, sentiment dropped again in the eurozone in November. In the US on the other hand, the index remained well above 50...
The year 2021 starts under pressure from the rising number of Covid-19 cases in numerous countries. In Europe in particular, countries have had to tighten their health restrictions to contain the spread of the virus. In the weeks ahead, these new restrictions are bound to have a further negative impact on consumer traffic flows in the retail and leisure sectors...
The world is rapidly warming up. Between 2010 and 2020, the average temperature increased by around 0.3°C, taking the global warming up to 1.2°C since the pre-industrial time. At this pace, global warming will exceed the Paris objective of 1.5°C before the end of this decade. The impact of global warming has already been felt in many parts of the world: devastating fires in California and Australia, inundations of coastal areas, and prolonged droughts in already dry places. An annual average of 21.5 million people have been forcibly displaced by weather-related sudden onset hazards – such as floods, storms, wildfires, extreme temperature – each year since 2008 (Source: UNHCR). This number could reach 150 - 200 million by 2050
Narratives – the stories people tell about events – may influence behaviour. In future years, several narratives may very well be used when looking back at economic developments in 2020. Big, unanticipated shocks do happen. In terms of monetary policy, a ‘whatever it takes’ attitude prevails. This also applies increasingly to fiscal policy. In terms of financial markets, the dominant attitude towards risky assets is to buy rather than to say ‘bye bye’. With Next Generation EU, the European Union has again demonstrated that, under pressure, it can make big leaps forward. Finally, attention to sustainable growth has become ubiquitous. Some of these narratives provide comfort but several also come with a warning.
