At first blush, Australia’s labor market recovery appears to have accelerated in August. The unemployment rate fell to a 13-year low of 4.5% versus expectations it would rise 0.4 percentage points to 5.0%. However, the lower…
Inflationary pressures are likely to keep the Bank of Canada at least as hawkish - if not more hawkish - than the Fed. Headline CPI accelerated to a 18-year high of 4.1% y/y in August. The diffusion index's extremely…
Highlights Fed: The Fed will be forced to clarify its definition of “maximum employment” in 2022, and the path of inflation will ultimately dictate how far the Fed tries to push the labor market. We expect Fed rate hikes to…
Highlights The equity risk premium has turned negative for the first time since 2002. It follows that any significant rise in bond yields will cause risk-asset prices to collapse, quickly flipping any incipient inflationary shock into…
Highlights Chart 1Employment Growth Will Rebound August’s weak employment growth reflects the surge of Delta variant COVID cases in the United States. This is evidenced by the fact that Leisure & Hospitality sector…
Highlights A trio of ECB hawks raised the prospect of an ECB taper. In the past, the current set of economic conditions in the Euro Area would have prompted the ECB to tighten policy. A potential economic deceleration this fall, the…
Highlights An Iran crisis is imminent. We still think a US-Iran détente is possible but our conviction is lower until Biden makes a successful show of force. Oil prices will be volatile. Fiscal drag is a risk to the cyclical…
Highlights China’s credit tightening may have surpassed maximum strength. Monetary policy will remain accommodative and fiscal policy will become more supportive in the rest of the year. However, overall regulatory oversight is…
Highlights Jackson Hole: The message from Jackson Hole is that the majority of the FOMC – including Fed Chair Powell - is ready to begin tapering asset purchases before year-end. There is less unanimity within the FOMC over the…