Chart of the Week: CPB World Trade Volume
Head of Macro Analysis
Summary: The latest CPB figures confirm there is no real improvement in sight for global trade in the short term.
Global trade recession is doomed to continue to weight negatively on economic activity for a prolonged period, as shown by the latest CPB figures. It was out at minus 0.8% year-on-year in July versus minus 1.7% in June. The month-on-month rebound was quite strong, reaching 1.9% in July, but it is likely to be short-lived considering the evolution of the three-month moving average and of most up-to-date Asian surveys.
The three-month moving average keeps moving downward, at minus 0.8% YoY in July, which is its lowest level since the Global Financial Crisis. On the top of that, Asian trade indicators are still sending warning signal about the economy.
If we look at South Korea, whose economy is 50% export driven, we have a bunch of indicators confirming the slowdown will last longer than most expected at the beginning of the year. Preliminary export data for the month of October, covering the period from the 1st to the 10th, are very worrying. The drop reached minus 8.5% YoY, and it is expected to get worse in the rest of the month. So far, South Korean’s exports went through eleven straight months of contraction.
Global trade will be a considerable drag on global growth this year and probably next year as China will continue to import less and trade war risks remain elevated despite “phase 1” deal’s finalization last week in Washington.
The next release of the CPB World Trade Monitor is scheduled for 25 October 2019.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.