Credence Family Office’s Post

Breaking news : the Chinese economy is in mild deflation ! Inflation is expected to pick up, but this relies on fiscal and monetary policy support lifting nominal demand. If current trends in the domestic economy are exacerbated, price falls could become entrenched. We expect inflation to rise in the next two years, as fiscal and monetary stimulus supports domestic demand, THOUGH it is likely to remain below or close to 1.5%. The potential exacerbation of current supply and demand trends coupled with demographic and debt overhang challenges, poses a risk of sustained price falls. Domestic demand is weak, and a longer-than-expected real estate downturn is a significant risk to our growth forecasts. Capital spending is increasing faster in export-oriented sectors. External demand is robust, but a slowing global economy in 2025 will likely constrain export growth. Supply-side developments compound these trends. Labour market indicators suggest that supply is outpacing demand. Unit labour costs declined in 2023 for the first time since 2000. All this indicates a degree of slack in the domestic economy. Our estimate of supply-side growth potential now looks weaker at 4.3% (versus a previous estimate of 4.6%), and we assess that the output gap is negative. A wide range of prices are falling. For example, producer price inflation has been negative since 2022. More in our comment: https://lnkd.in/eV8rNDJK The report for subscribers: https://lnkd.in/exfW4hcS #fitchratings #fitchoncredit #china

On the back of improved near-term world growth prospects, we have raised our 2024 global GDP growth forecast by 0.3pp to 2.4% in its latest Global Economic Outlook. This reflects a sharp upward revision to the US growth forecast to 2.1%, from 1.2% in the December 2023 GEO, due not least to an unprecedented pro-cyclical widening in the US fiscal deficit in 2023. The revision to the US outweighs a marginal cut to our China 2024 growth forecast - to 4.5% from 4.6% - and a small revision to our eurozone forecast, to 0.6% from 0.7%. We have revised up our growth forecast for emerging markets excluding China by 0.1pp to 3.2%, with forecasts raised for India, Russia and Brazil. Fitch expects world growth in 2025 to edge up to 2.5% (unchanged from before) as the eurozone finally recovers on a pick-up in real wages and consumption - but US growth slows. More in a free-to-air summary from Chief Economist Brian Coulton at https://lnkd.in/dwsbTHD6; the full report at https://lnkd.in/dJKDP9Jb. #fitchoncredit #globaleconomy #fiscalpolicy #chinaeconomy #markets

Last week, #markets digested plenty of #economic updates with the U.S. delivering another blow-out jobs report. Moreover, U.S. industrial production rebounded in March, ending an 18-month period in contraction territory, whereas growth in the services industry slowed but remained firmly in expansion. Over in Europe and Japan, the services industry helped to offset a downturn in manufacturing. (In Japan the industrial sector accounts for approx. 20% of the economy and in Germany for approx. 23%, respectively.) In China, growth accelerated in both, the manufacturing and services sectors. This week, participants in #financialmarkets are eying on Wednesday the latest U.S. (CPI) inflation print and the release of U.S. Fed meeting minutes. On the same day, Canada and New Zealand are holding monetary policy meetings. On Thursday, #investors focus is on the ECB interest rate decision in Europe, while China publishes an inflation update and the U.S. releases PPI “factory gate” inflation figures along with weekly jobless claim counts. The OPEC monthly report is out on the same day. On Friday, Singapore and South Korea are holding their monetary policy meetings, and GDP data are due in Singapore and the UK. While the first quarter 2024 earnings season kicks off in all earnest next week, U.S. banks Citi & JPMorgan Chase & Wells Fargo report this Friday already. #assetmanagement #wealthmanagement #investing

Goldman Sachs Research forecasts 2025 global GDP growth at 2.7%, with the US leading at 2.5% and the euro area lagging at 0.8%. Currently, declining inflation and easing monetary policies are providing a supportive environment, though potential trade policies could introduce uncertainty and weigh on business investment. Sustained US productivity gains may drive economic outperformance while escalating trade tensions could reshape global growth trajectories and economic partnerships. #Interest #Inflation #Economy

💡 Market Insights by Bas Kooijman MSTA 💡 ◾ U.S.: stocks hit record highs, driven by optimism surrounding China’s economic stimulus and advancements in AI, with significant gains in the Dow Jones and S&P 500, particularly in tech and materials sectors. ◾ Europe: the pan-European STOXX 600 Index rose 2.69%, bolstered by hopes for interest rate cuts due to slowing business activity and positive sentiment from China’s stimulus. ◾ Japan: core CPI rose 2.0% year-over-year in September, indicating ongoing inflation challenges. ◾ China: issues new measures that aim to enhance short-term activity; however, experts express doubts about their sufficiency for sustainable long-term growth. Looking ahead, investors should be concerned about potential economic slowdowns due to declining consumer confidence, persistent inflation and interest rate hikes, and uncertainties surrounding China's long-term growth. Read the full article for deeper insights into these and other developing market trends. #marketinsights #globalmarkets #financialmarkets #us #europe #japan #china #dhfcapital

Over the past 60 years, a global factor has explained about 58% of the variation in inflation across 56 countries. This means that more than half of the changes in inflation rates can be due to factors that affect many countries, not just one. This report looks at international inflation trends from 1960 to 2023, focusing on different periods of globalisation. Here are my key takeaways: 🔶 The global factor explains 58% of inflation changes overall and 72% in developed countries. 🔶 Core inflation is also influenced globally, with 53% explained by the global factor. 🔶 Developed economies show stable influence from the global factor, while developing economies vary more. 🔶 The global factor is linked to the dollar's value, US interest rates, and commodity prices. 🔶 US inflation affects the global factor during major events like the 1970s, 1980s, the financial crisis, and COVID, but lags behind after COVID. 🔶 Being part of global trade networks significantly affects local inflation. 🔶 The second global factor captures more country-specific inflation trends, especially in developing countries. 🔶 China's inflation is mildly linked to the second global factor. Policymakers may need to consider global economic trends and factors when designing domestic monetary policies. #Inflation #globalisation #Fintech

Manages to hold its own awaiting US economic data – El Financiero - https://lnkd.in/dGqt7yD9 -The Mexican peso is showing resilience after Asian stocks opened higher on Monday, August 12, as markets remain focused on the Key facts from the United States, to be published this week, to find out how the world's largest economy is doing.The national currency is quoted at 18.85 units per

The IMF published this week its' current view and near term forecast for Asia and I would like to highly recommend it. It can easily be found online at their website. I am going to post a couple of the most important data metrics from their research and please note that all text and graphics are © IMF, 2024. All Rights Reserved. Initially, a quick synopsis of this very important economic region. "With rapid disinflation and resilient growth, Asia and the Pacific is closing in on a soft landing. At the same time, significant heterogeneity has emerged within the region regarding the pace of disinflation, the level and the drivers of growth, and the cyclical position. Hence, policies need to be carefully calibrated to country-specific needs and circumstances. Economic activity in Asia and the Pacific outperformed expectations in the second half of 2023, despite a challenging environment characterized by still-tight monetary policies and muted external demand. The region grew by 5.0 percent last year, 0.4 percentage point stronger than forecast in October. Upside surprises were concentrated in emerging markets, driven primarily by robust domestic demand. Still, headline inflation has continued to decline, especially in emerging Asia, reflecting timely monetary tightening in 2022 and early 2023, retreating commodity prices, lower global manufactured goods price inflation, and supply capacity coming back onstream following the COVID-19 pandemic. The pace and degree of disinflation has differed among Asian economies, however, with some still seeing sustained price pressures and others facing deflationary risks. Growth in 2025 is projected to moderate further to 4.3 percent, with the structural slowdown in China a key factor. Near-term risks are now broadly balanced. Retreating inflation and, consequently, the prospect of earlier monetary easing have increased the likelihood of a soft landing, both in Asia and globally. Stronger-than-expected growth in Europe and the United States is an upside risk for Asia’s exporters. In China, a deeper-than-anticipated property sector correction is a downside risk, while greater-than expected policy support is an upside risk—both could be sources of spillovers to China’s neighbors. Japan’s exit from negative interest rate policy has proceeded smoothly thus far, easing previous concerns about spillovers from sudden repricing."

𝐓𝐮𝐞𝐬𝐝𝐚𝐲 𝐔𝐩𝐝𝐚𝐭𝐞: 𝐔.𝐒. 𝐓𝐫𝐚𝐝𝐞 𝐃𝐞𝐟𝐢𝐜𝐢𝐭 𝐒𝐡𝐫𝐢𝐧𝐤𝐬 𝐀𝐬 𝐄𝐱𝐩𝐨𝐫𝐭𝐬 𝐇𝐢𝐭 𝐀𝐥𝐥-𝐓𝐢𝐦𝐞 𝐇𝐢𝐠𝐡 👉 𝐓𝐫𝐚𝐝𝐞 𝐃𝐞𝐟𝐢𝐜𝐢𝐭 𝐍𝐚𝐫𝐫𝐨𝐰𝐬: The U.S. trade deficit fell to $70.4 billion in August, driven by record-high exports of $271.8 billion. Key sectors like capital goods and industrial supplies fueled this growth, despite a dip in semiconductor exports. Imports decreased by 0.9%, indicating weaker demand for foreign goods, particularly in areas like crude oil and automobiles. 👉 𝐆𝐥𝐨𝐛𝐚𝐥 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐑𝐢𝐬𝐤𝐬: The World Bank forecasts slower growth in 2025, particularly in China, which could disrupt global trade, especially for economies that depend on Chinese markets. Geopolitical tensions and supply chain issues remain concerns for global stability. 𝐖𝐡𝐚𝐭 𝐃𝐨𝐞𝐬 𝐓𝐡𝐢𝐬 𝐌𝐞𝐚𝐧?: A shrinking trade deficit could support GDP growth for the third quarter, showing the U.S. economy remains resilient amidst global uncertainties. However, these global risks could disrupt future growth. #TradeDeficit #Exports #GlobalRisks #EconomicUpdate