Macro Brief: there was good news and bad news
Head of Macro Analysis
Summary: Amid heightened focus on growth in both the Eurozone and in China, one of the most pressing issues is how will the ECB elaborate on its TLTRO plans.
On the other side of the world, China has added further stimulus. The government plans to cut the VAT rate that covers the manufacturing sector by three percentage points. This is only one measure among many others to offset the current negative economic trend. As economic data remains bad, we expect that China will announce more such measures in the coming weeks.
However, as we all know, the current focus is more on the central banks from developed countries, especially the European Central Bank. Markets should be rather quiet in coming days, waiting for insights regarding a new round of targeted longer-term refinancing operations in the euro area. In our view, the ECB's governing council should refrain from giving a lot of detail concerning the calendar as there are still some technical issues to resolve. Focus should be on forward guidance – “lower for longer” – to reassure investors.
In the short term, we will have plenty of economic data to monitor. There is no much to expect from ISM non-manufacturing, which is still broadly well-oriented in the US, contrary to ISM manufacturing.
Elsewhere, Eric Rosengren and Neel Kashkari, board members of the Federal Open Market Committee, are due to speak this afternoon about the macroeconomic outlook and monetary policy. We will pay attention to the remarks from Kashkari who is, in our point of view, one of the best US economists. He has been saying for several months that the Fed would face great difficulties in raising interest rates. His speech will certainly provide some food for thought.
Today's Calendar (All times GMT)
03:30 Australia, RBA Overnight Rate
07:30 Switzerland, CPI
08:50 France, Services PMI
08:55 Germany, Services PMI
09:00 Eurozone, PMI indices
15:00 US, ISM non-manufacturing index
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.
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