👇 (11 updates) Real Resilience Meets Financial Fragility
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Real Resilience Meets Financial Fragility
(11 Updates)
✔ “The market turmoil led to a forceful and apparently successful policy response that now highlights the competing forces of financial fragility vs. resilience of the real economy.”
✔ “As a result of the stronger-for-longer macro activity story, core inflation has remained sticky although overall inflation has peaked.”
✔ “Markets have stabilized somewhat, volatility has eased, and expectations around future steep policy rate cuts have been pared back.”
✔ “Financial conditions need to tighten further, which in turn calls for higher policy rates.”
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🇺🇸 UNITED STATES
✔ “GDP growth forecast is 0.7% for 2023 and 1.4% for 2024.”
✔ “With a high degree of uncertainty, the fed funds rate may now peak at 5.00%-5.25% by May 2023, in our view.”
✔ “This lower peak stems from the Fed's belief that the recent turbulence will result in tightening credit, curtailing aggregate demand, and slowing inflation, doing some of the work of higher policy rates.”
🇪🇺 EUROPE
✔ “Despite the Eurozone's solid start to 2023, our baseline scenario remains one of growth stagnation, with an elevated risk of a mild recession down the road.”
✔ “Sticky inflation will force the ECB to raise rates for longer than we previously expected, probably until the deposit facility rate reaches 3.50% by this summer, unless the ongoing market turmoil undermines the current outlook for growth and inflation.”
🇨🇳 CHINA
✔ “We expect a largely organic recovery in China this year, led by consumption and services; GDP growth forecast of 5.5% exceeds the country's modest target of "around 5%."
✔ “Spillovers to the rest of the region--and globally--will be modest and limited mainly to tourism and some commodity prices.”
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Disclosure
This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.