BoJ to Keep Loose As No Immediate Sign of Target CPI

The set-up in Japan continues to favour a weaker yen. Inflation is coming, but the BoJ will want to be sure the train has arrived at the station before stepping off at the monetarytightening platform. The top-left chart shows the lagged effects of a weaker yen should...

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Rising Stress Levels in UK Households

Over 60% of the increase in GDP since 2010 has been driven by household expenditure. While nominal household consumption has increased by 25% since 2010, gross disposable income is up just 19%, with the financing gap bridged with unsecured leverage and a drawdown in...

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Headwinds for Housing and Autos

Earlier this year we wrote a Thematic piece on autos arguing that we would see auto companies cut prices to move inventory, idle plants and produce fewer cars. We have already seen a slowdown in car sales, and some manufacturers have guided to lower production this...

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Financial Balkanisation of the Eurozone

Convergence in core-periphery sovereign credit spreads since 2012 would seem to vindicate the raft of monetary easing measures deployed by the ECB to stabilise the eurozone. This is only half the story, and the other half is decidedly negative. The eurozone collapse...

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UK Gilts Overvalued

UK gilts are overvalued, currently yielding only 1%. The UK has seen a boom in consumer credit in recent years, with rates around 10% YoY in the main categories of consumer lending (top chart). Rising inflation has pinched wages, with the result real wages are now...

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China Broad Credit Growth Slows to Zero

The recent tightening of credit we have seen in China is primarily aimed at clamping down on shadow financing. Wealth management products have rapidly grown in size, from only 8% of total banking deposits in 2012 to over 20% today. The top chart shows China’s banks’...

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