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Reopening the Global Economy

July 7, 2021
Recent weeks have seen the global recovery motor along as expected, supported by the vaccine rollouts and a further easing of restrictions. However, since our last House View in May, the balance of risks is slightly more negative given the continued global reach of the delta variant and the reaction to the FOMC. [more]

More documents contained in "The House View - Snapshot"

38 (37-38)
June 28, 2017
37
Global investors have recently been forced to sift through mixed signals from macro data and markets. Chief among these discordant messages is the apparent dichotomy between softer inflation, lower yields and flatter curves, and falling oil prices on the one hand, and still solid global growth and firm risk sentiment on the other hand.
We remain generally optimistic in our global macro outlook despite these mixed signals. Supply-side factors, rather than a weaker demand outlook, underpin the fall in oil prices, and this is positive for growth for oil importers. The softening core inflation trend is due primarily to temporary factors, particularly in the US, and the uptrend should resume given the solid growth momentum.

Indeed, our global growth outlook is little changed since the start of the year. We marked down US growth on lower odds of Trump’s policy agenda, but still expect deregulation and modest fiscal stimulus to support above-trend growth. This downgrade is compensated by upgrades to eurozone and China growth.
Our market views largely reflect this overall constructive tone: we are not concerned about the discordance between firming risk assets and falling rates; the normalisation of US and Europe rates should resume in coming months. In FX we have turned more positive on the euro but stay bearish sterling.
Our base case that political risk would not escalate is playing out. Moreover, the intervention to resolve ailing banks in Veneto is positive and lowers risk in Italy. The exception, as expected, is the UK, where the outcome of Brexit has become more binary: the risk of a soft Brexit has risen, but so has that of a crash Brexit.
David Folkerts-Landau, Group Chief Economist
Key pages this month:
P6 Mixed signals
P8 Oil less a concern for risk assets
P11 Flat US yield curve but low risk of recession
P17 Europe political risk not materialising
P23 Limited scope for further oil weakness

You can access a two-page update of Deutsche Bank Research's views on g [more]
April 25, 2017
Analyst:
38
Politics remain a key focus for markets, but the latest developments in Europe are positive. In France, the first round of the presidential election ruled out the least market-friendly ‎outcome, and although eurosceptic Marine Le Pen is in the run-off as expected, polls suggest reformist Macron should win. The snap election called in Britain for June is a material positive game-changer for Brexit negotiations.
Beyond politics, focus has been on fading conviction in so-called Trump trades – higher inflation expectations and interest rates and buoyant risk assets – following speed bumps on the US domestic agenda and increased geopolitical tension.
But with global macro momentum solid – though off recent highs – and global growth expected to pick-up next year and approach 4% in 2018, do not dismiss inflation risks, especially in the US. Indeed the macro backdrop comforts the view that we are past peak central bank easing. The Fed will likely raise rates twice more this year and announce the start of the unwind of its balance sheet. The ECB is on track to announce a taper of its quantitative easing programme later this year, but the tone at the April meeting should still be quite cautious.
We have revisited our currency views. The snap UK election caused us to increase our sterling forecast but did not alter our medium-term bearish stance. We still expect the euro to break parity but the sequencing of the ECB's tightening policies is key: a shift toward rate rises rather than a withdrawal of quantitative easing would be bullish for the euro. In rates, we expect bond yields to climb beyond near-term election risk. In credit we expect the low default environment to persist. We see valid counters to the consensus view that European equities should outperform US equities.
David Folkerts-Landau, Group Chief Economist
Key pages this month:
P6 French election updateP7 UK snap electionP10 Fading Trump tradesP11 Don’t dismiss inflationP19 Updated views on sterling and euro [more]
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