Citing Slow Growth, Draghi Urges Reform
European Central Bank President Mario Draghi believes global growth is too slow, and Europe needs market reforms to stimulate demand.
Category: Markets
The Corporate Response to a ‘Brexit’ is Complicated
The die is cast: British people have voted for a government that has promised to hold a referendum on the UK’s EU membership by 2017. This week, business has intervened to liven up the debate. The country’s main industry lobby group wants its members to make a decisive contribution to the pro-EU campaign, but what has become clear in recent days is that there will be a far more complex picture of the corporate response than we might have anticipated.
Japan’s Economy Grows at Fastest Pace in a Year
As many countries around the world, Japan suffered a recession following the downturn of the US economy in 2008. While some economists and financial experts had expressed concerns about Japan’s ability to successfully emerge from its stalled economic condition, a report by the nation’s statistics agency indicates that the country’s upward trend accelerated unexpectedly in the first quarter of 2015.
The U.S. FOMC Minutes Signal a Likely Rate Hike Delay
The US Dollar Index advanced in the first three days of the week but is under some pressure today. The FOMC minutes confirmed what the market had already known, which is a rate hike next month is highly unlikely.
Meanwhile outside of the UK’s strong retail sales report, most of the data today has disappointed. These include the flash PMIs in both China and the Eurozone.
Joko Widodo’s First 100 Days in Office
Distinguishing the first 100 days of President Joko Widodo (Jokowi) and his government are historic reforms to fuel subsidies, social assistance to the poor, streamlined investment licensing and virtually no new restrictive regulations on foreign trade. Fuel subsidy reform has given the government fiscal space for infrastructure development. However, if Indonesia is to attract greater foreign investment, there is still scope to promote openness and regional integration in what is a critical year for Indonesia’s involvement in international trade agreements.
Abenomics Vindicated on Japan GDP Beat
Economists are proclaiming a victory for Japan’s QE-fueled economy as the country announced a second quarter of expansion that beat expectations.
Japan saw 2.4% annualized growth in the first quarter of 2015, the fastest rate of growth in a year and slightly stronger than what is expected for the United States in 2015. While estimates for American growth continue to face downward revisions, the Japanese are surprised to see a strong expansion even despite well-known demographic headwinds stifle aggregate demand.
Japan Economy Grew Faster than Expected in the First Quarter
Japan’s economy grew 0.6 percent in the first quarter, surpassing previous expectations of 0.4 percent growth. The Japanese economy grew 2.4 percent annually from January to March, which outgrew U.S. annual growth of 0.2 percent.
The Last Round of UK Deflation was Pre-Beatles
The rate of inflation has turned negative for the first time in 55 years in the UK. The phenomenon of deflation in economic jargon means consumers will see a drop in prices, with essentials like petrol and food cheaper than this time a year ago. Crucially, deflation constitutes a fall in prices over a sustained period. This can be a very serious economic problem and one that is not easy to cure. So should the UK be worried?
A Preview of Emerging Market News and Events
EM assets start the week under some mild pressure. This comes after last week’s rally, which was fed by the positive combination of stabilizing commodity prices, continued dollar softness, and falling US yields. Those impulses are likely to continue this week. With little on this week’s calendar in terms of US data that could help turn around market expectations on Fed lift-off, EM currencies could extend their rally.
