Author Archives: Olivier Desbarres

UK referendum on EU membership – Darkness before dawn

Negotiations over – One-and-done referendum set for 23rd June 2016

For the second time in just over a year the British electorate will take part in a key national vote, with Prime Minister David Cameron having confirmed a public referendum on 23rd June 2016 on whether the United Kingdom (UK) should remain a member of the European Union (EU). David Cameron announced last week that he had negotiated and agreed with the EU executive to improved terms and conditions for the UK’s EU membership in the key areas of migrant welfare payments, safeguards for Britain’s financial services and the UK’s independence from further EU integration and regulations. Read more

State of Play – When less is more

Central banks’ tinkering with monetary policy and frequent u-turns are seemingly doing more harm than good. The Fed and the Bank of England have provided little clear forward guidance and the Bank of Japan’s move into negative rates only had a passing positive impact. While safe-haven flows may continue to appreciate the yen, a less competitive currency is likely to ultimately weigh on the economy and in turn the yen. In contrast the Korean won looks reasonably attractive at these levels. Read more

What to expect in 2016 – same, same, but worse

Trading on Fear

It is clear that markets so far this year are trading on sentiment, more specifically fear, with hard-data playing second fiddle. Or more accurately, price action suggests that markets are focusing on disappointing December numbers (e.g. US ISM) or even reasonably uneventful data (Chinese manufacturing PMI) and ignoring strong data such as U.S non-farm payrolls, Chinese services PMI and exports (see Figure 1).  The hit-and-miss approach of Chinese policy-makers to stabilise equity markets (and ultimately growth) have done little to restore confidence. I nevertheless flag in Figure 37 some of the key data and events to focus on this year. Read more

Asian currencies sticking to script

Despite the volatility in financial markets, Non-Japan Asia (NJA) currencies continue to behave broadly in line with historical patterns. Specifically, a basket of NJA currencies (excluding the renminbi) which was appreciating at about 3% month-on-month versus the USD dollar is now weakening in month-on-month terms, as largely predicted (see Figure 1). The pattern is similar when NJA currencies are measured against trading partner currencies. Read more

Global Growth Likely slower in Q3, modest rebound in Q4 possible

Global growth likely slowed in Q3, dragged lower by OECD, in line with soft global PMI

Countries which have so far released Q3 GDP data account for about half of world GDP, using IMF purchasing power parity (PPP) weights. Based on these data, global real GDP growth in Q3 edged slightly higher to 3.2% year-on-year (yoy) from 3.1% yoy in Q2 (see Figure 1), according to my estimates[1]. Read more

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