GDP growth, inflation, interest rates and exchange rates
The interest rate projections (‘dots’) of the FOMC members represent a reference point that can help investors and economic agents in general in forming their own interest rate expectations This can be particularly welcome when the monetary environment is changing swiftly like has been the case over the past two years. To explore this, a comparison has been made between the federal funds rate projections of the Survey of Market Participants (SMP) and those of the FOMC members. It seems that the dots may play a role in anchoring long-term interest rate expectations. The private sector forecasts closely follow the dots for 2023 and to a lesser extent for 2024, beyond which they are essentially stable. This is important considering that it might influence the pricing of bonds
Rates and exchange rates - GDP Growth and inflation
GDP growth, inflation, interest and exchange rates
In March 2023, the M2 measure of money supply contracted for the fifth consecutive month in the United States (-4.5% over one year).
GDP growth, inflation, interest rates and exchange rates.
After last year’s significant depreciation versus the dollar, the euro has found a new strength. Key factors are the reversal in the current account balance, which after moving into negative territory last year is back into surplus, and, since the autumn of 2022, the narrowing of the 1-year interest rate differential with the US.This reflects the view that the Federal Reserve is approaching the end of its tightening cycle whereas the ECB still has more work to do. We expect that this factor will continue to drive the exchange rate in the coming months. Moreover, there is also a higher likelihood that the Federal Reserve will cut rates before the ECB does
GDP growth, inflation, interest rates and change
The interest rate on new home loans for eurozone households rose by an unprecedented 177 basis points (bps) year-on-year in January 2023. It stood at 3.1% this past January compared with 1.3% in September 2021, its lowest level ever.
February S&P Global PMI data provided good news overall. One of the key results is the recovery in China's manufacturing PMI, which reached 51.6, its highest level in eight months (compared with 49.2 in January). This improvement is linked to the gradual recovery in factory production since the lifting of health restrictions. In the eurozone, the figures are mixed down in France, Germany and Austria, but up quite sharply in Spain, Italy and Ireland. In the United States and Japan, the index remained below the 50-point threshold, i.e. in a contracting zone for the fourth consecutive month.
Coping with uncertainty is at the heart of every investment decision. How investors deal with uncertainty is influenced by the interplay between their conviction level when forming views, the nature of the uncertainty and their decision horizon. It is highly likely that elevated uncertainty shortens the investment horizon: when investors don’t have strong opinions, they will probably adopt a short-term approach (or simply do nothing). Even those with strong views about the medium run -e.g. the risk of recession, which would weigh on equity markets- may opt for a short-term approach when the short-term driver -e.g. getting closer to the peak in policy rates- works in the opposite direction
Outlook for GDP growth, inflation, interest rates and exchange rates.
GDP Growth, inflation, interest and exchange rates
Outlook for GDP growth, inflation, interest rates and exchange rates
