Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
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Chart of the Week: World trade data
Christopher Dembik
Head of Macroeconomic Research
Summary: The latest world trade data tend to confirm a stabilization in global trade growth, at least in the short term, mostly resulting from a positive base effect.
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The CBP world trade volume is back to positive territory, though it remains very weak compared to levels reached last year. The three-month moving average was out at 0.4% year-on-year in April 2019 versus the lowest point reached this year at minus 0.4% in past February.
The next release of the CPB world trade monitor is scheduled for 25 July 2019.
Looking at more up-to-date trade data, especially weekly cost of freight proxies, the stabilization is more obvious. After seasonal adjustment, the 20-day moving average of the Baltic Dry Index is likely to turn positive this week. The latest data released last week was out at minus 3% year-on-year. We also notice the same trend towards stabilization for the Harpex index, which is a good measure of trade in consumer goods.
However, stabilization may be short-lived as risk remain elevated due to the trade war, potential currency war and China’s slowdown that has not stopped yet. In our view, weak global trade will continue to negatively weigh on growth in H2, despite more dovish central banks and upcoming global fiscal stimulus.
The CBP world trade volume is back to positive territory, though it remains very weak compared to levels reached last year. The three-month moving average was out at 0.4% year-on-year in April 2019 versus the lowest point reached this year at minus 0.4% in past February.
The next release of the CPB world trade monitor is scheduled for 25 July 2019.
Looking at more up-to-date trade data, especially weekly cost of freight proxies, the stabilization is more obvious. After seasonal adjustment, the 20-day moving average of the Baltic Dry Index is likely to turn positive this week. The latest data released last week was out at minus 3% year-on-year. We also notice the same trend towards stabilization for the Harpex index, which is a good measure of trade in consumer goods.
However, stabilization may be short-lived as risk remain elevated due to the trade war, potential currency war and China’s slowdown that has not stopped yet. In our view, weak global trade will continue to negatively weigh on growth in H2, despite more dovish central banks and upcoming global fiscal stimulus.
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