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The end of ‘QE infinity’?
The new UK chancellor Philip Hammond © Getty Images Until recently, the rate of expansion in global central bank balance sheets seemed likely to remain extremely high into the indefinite future....
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New fiscal theory and the US election
Hillary Clinton and Donald Trump © Getty Images Presidential elections have often marked major changes in American attitudes towards fiscal policy. The arrival of President Kennedy in 1960 represented...
View ArticleTrump and the markets: good, bad or (very) ugly?
The response of the financial markets to the US election result has been almost as contradictory as the rabble rousing campaign of the President-elect himself. Unmitigated gloom in the hours after the...
View ArticleTrump and Yellen: the politicisation of the Fed
The global markets remained in reflationary mode for much of last week, a regime that has now persisted for many months. Led by the US, bond yields have been rising, mainly because inflation...
View ArticleGlobal reflation continues into 2017
As the global economy enters 2017, economic growth is running at stronger rates than at any time since 2010, according to Fulcrum’s nowcast models. The latest monthly estimates (attached here) show...
View ArticleChina and the Fed: how different this time?
Exactly a year ago this week, the mood in the financial markets started to darken markedly. As 2015 had drawn to a close, financial markets had seemed to have weathered the first increase in US...
View ArticleHow will President Trump reshape the Fed?
President Trump has an almost unprecedented opportunity to reshape the key personnel and legal basis of the Federal Reserve in the next 12 months, essentially rebuilding the most important economic...
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Whatever happened to secular stagnation?
A year ago, Lawrence Summers’ perceptive warnings about the possibility of secular stagnation in the world economy were dominating global markets. China, Japan and the Eurozone were in deflation, and...
View ArticleWhy the Fed means business this time
US monetary policy has now clearly embarked on an important new phase. For a long while, the markets have been extremely reluctant to recognise that the Federal Reserve might actually mean what it says...
View ArticleFed tightening but no revival of the ‘Greenspan conundrum’
The robust US employment data last Friday have left almost no room for doubt that the Federal Open Market Committee will raise short term rates by 25 basis points on 15 March, and will probably warn of...
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Three ways the economic and financial cycle could end
The global economic recovery that started amid the gloom of the financial crash in March 2009 is about to celebrate its 8th birthday. In the advanced economies (AEs), the GDP growth rate during this...
View ArticleThe end of global QE is fast approaching
One of the most dramatic monetary interventions in recent years has been the unprecedented surge in global central bank balance sheets. This form of “money printing” has not had the inflationary effect...
View ArticleThe consequences of shrinking the Fed’s balance sheet
The Federal Reserve is actively considering a profound change in US monetary policy, in effect the reversal of quantitative easing (QE). In its March meeting, the FOMC discussed its strategy for the...
View ArticleThe Fed’s lowflation dilemma
A few months ago, the Federal Reserve seemed determined, at long last, to normalise monetary policy in the US. In fact, it still seems to be set on that course. The FOMC has indicated that it intends...
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Global expansion intact, with some slowing in US
In this month’s regular update on global activity data, the Fulcrum nowcasts have continued to report that the world economy is expanding at slightly above trend rates. As we noted last month, there...
View ArticleTerm premia scramble the Fed’s dot plot
In January 2012, the FOMC started to publish its “dot plots” showing the committee’s median expectation for the fed funds rate several quarters ahead. Ever since then, it has become customary to...
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Central banks turn a blind eye to lowflation
Markets are becoming concerned about the central banks’ response – or rather their lack of response – to a series of inflation releases that have surprised economists on the low side recently. A few...
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What’s driving the global expansion?
In this month’s regular temperature check on global economic activity, the Fulcrum nowcasts identify a continuing strong and co-ordinated global expansion, with no significant signs of any meaningful...
View ArticleUS inflation decline is too persistent to ignore
The US CPI report for June, published on Friday, was the fourth successive monthly print that surprised on the low side. Initially, these inflation misses were dismissed by the Federal Reserve as...
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Global growth still at record rates for this expansion
The latest monthly reports from the Fulcrum nowcast models of global economic activity show that the growth rate in the world economy is being maintained at the firmest rate recorded since the early...
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