Simply Economics

Despite the recent rise in long rates, neither the Federal Reserve nor the Bank of England are likely to make any QE adjustments. Covid cases have been coming down and vaccination rates going up in both the US and UK, in sharp contrast to the Eurozone where the outlook is becoming more uncertain.

With vaccines rolling out and Covid cases coming down, our team updates the outlook for inflation and long-term interest rates and what it may or may not mean for any changes in central bank policy.

Inflation may still be well below target but it is on the rise as are long-term interest rates. How these factors are affecting the financial markets and monetary policy and what they mean for central-bank communication strategy are points of this week's discussion.

This week's topic is whether central banks may begin to increase or decrease QE as a means of controlling exchange rates and the related risks that such action might bring to financial market stability.

Inflation expectations in the financial markets are rising quickly in contrast to actual inflation measures which are still subdued.

Brian Jackson and Jeremy Hawkins pull together the latest economic trends and discuss the importance to financial markets of the relative pace of the vaccine rollout.

Jeremy Hawkins and Mark Pender assess the latest economic data from Europe and the US, including a sharp drop in UK retail indications and sharp gains for US home prices. GDP outlooks are also discussed as well as issues at play for coming central bank meetings.

Our duo of Jeremy Hawkins and Mark Pender round-up recent data and discuss the outlook for pending data and upcoming central bank announcements. Themes include weakness in the US labor market, ECB lending worries as well as the separation between assessments of current conditions and expectations for future recovery.

Our team discusses the latest employment news from both the US and Canada, as well Covid counts and restrictions in Europe and what it may mean for first-quarter activity.

With much of the global hospitality sector hit by Covid-19 restrictions, takeaways have been a lifesaver for many cafes, pubs and restaurants in 2020. But throughout the year, there’s also been a number of interesting takeaways to be had from how policymakers and financial markets have responded to the coronavirus pandemic. Jeremy Hawkins takes a look at some of the most significant.

Balancing between near-term weakness and medium-term prospects of vaccination relief, the Federal Reserve is not expected to make any policy moves at this week's meeting. And as long as Brexit remains up in the air, neither is the Bank of England though should a no-deal emerge, the bank could take pre-emptive action. Also meeting this week will be the Swiss National Bank whose easing bias, given stability in the Swiss franc, isn't likely to be tested, as well as the Bank of Japan where QE extension is a possibility.

The post-Brexit world is imminent but has yet to take shape. Jeremy Hawkins and Mark Pender discuss what various outcomes might mean for currencies and also discuss possible outcomes for next week's slate of central bank meetings and their possible effects on the markets.

The impending arrival of a Covid-19 vaccine continues to underpin global stock markets despite mounting evidence of weak fourth quarter GDP in Europe and some signs of slowing activity in the U.S. Geopolitical issues are also discussed as a possible threat to the economic recovery in parts of the Asia/Pacific region.

Jeremy Hawkins takes a look at the state of the recovery in the major economies and warns that future prospects could be seriously damaged by emerging disputes between and amongst fiscal and monetary policymakers.

Strength in retail sales and housing as well as business investment appear to be giving the US an edge at least relative to Europe. Jeremy Hawkins and Mark Pender discuss the latest economic data as well as the very latest updates on European fiscal stimulus and, not least, what is supposed to be the final act for Brexit.

The unknown outcome of the US election may be increasing the risk that new fiscal stimulus will either be limited or delayed. Our panel also discusses the Reserve Bank of Australia's move this week to cut interest rates and whether it may be anticipating increasing stimulus, perhaps negative rates, from other central banks including the European Central Bank and Bank of England both of which are facing a rising tide of Covid infections.

Monday's announcement of a breakthrough vaccine promises perhaps a timely turnaround for the global economy, in turn raising questions whether central banks will begin the delicate policy shift to stimulus withdrawal. Jeremy Hawkins and Mark Pender also discuss the latest implications of the US election as well as the immediate economic outlook which, given new restrictions underway in Europe, may not be positive at all.

Financial markets, including currencies, are showing no dislocations despite surging global debt and aggressively stimulative monetary policy. And even more aggressive policy may in store amid the possibility that the general weakness of the economic recovery will force yet more central banks to adopt negative policy rates.

What to expect or not to expect from the EU leaders' summit is this week's feature, one that poses possible and immediate risks to UK assets. Jeremy Hawkins and Mark Pender also discuss worldwide debt, worldwide disinflation, Greek bonds and global growth forecasts.

Relaxation of Covid restrictions is giving much of Asia an economic lift, while lack of new restrictions is a plus for the US. Yet in Europe infections are on the rise at the same time that inflation is moving in the wrong direction, both pressuring the European Central Bank to perhaps increase QE. For all regions, new fiscal stimulus, delayed or not, is the universal cry.