Chief Economist’s Weekly Brief – Bottoming out?

Last week, several economies reopened without a material evidence of a spike in infection rates, well, so far.  That said, the northern-southern hemisphere divide in the number of cases continues to widen, leading some (incl. the Fed) to believe that there might be a second wave. Two risks resurfaced – escalation of US-China trade tensions and disruptive Brexit. On the activity front, data for May suggests that the worst might be behind us.

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Chief Economist’s Weekly Brief – More of the same

The easing of lockdown restrictions, and with it the economic recovery, looks set to be taken tentative step by tentative step. Witness South Korea having to reintroduce some distancing measures. Meanwhile data is putting more colour on the enormous scale of the economic damage. No surprise that the Bank of England is envisaging the worst downturn since 1706. Even worse than the “Great Frost” of 1709.

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Chief Economist’s Weekly Brief – Dichotomy

April has been a month of contrasts. Multi-year low prints on economic activity in both the US and the Euro area, with worse to come, on the one hand. While equity markets continued to push higher from their late-march lows, buoyed by unprecedented monetary and fiscal stimulus. Markets will always run ahead of the economy. The question is, with so much uncertainty on the pace of recovery, have they overdone it? 

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Chief Economist’s Weekly Brief – Record breaking

Amid new rules limiting people’s movement and closing non-essential businesses, data has begun to emerge highlighting the severity of the downturn. PMI indices in the UK, US and EU have all recorded historical lows. Unemployment applications are breaking all records. Fitch, a ratings agency, downgraded the UK sovereign debt, citing the impact on the public finances and the economy.

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Chief Economist’s Weekly Brief – “That was the week that was”

The UK switched its COVID-19 response strategy from mitigation to suppression after it became clear that both the death toll and clinical pressure would be intolerable. Vast swathes of the economy have effectively stopped. And monetary easing and unprecedented levels of fiscal stimulus, while supportive, cannot fully offset this. European countries imposed further civic restrictions, while the US Senate failed to pass the enormous $1.8 trillion package for coronavirus relief. Few weeks have the power of the one we just experienced. And it’s the shock of the new. 

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