Iran sanctions push up oil prices

Production in Iran is tumbling as sanctions begin to bite OPEC+ only able to partly compensate for lower Iranian production US shale producers are facing short-term headwinds from pipeline bottlenecks Lower growth in global demand for oil as economic growth weaken Continued inventory withdrawal supports high oil prices   181004 Oil Market Update

Turkey in freefall

It has been a spectacular bad week for the Turkish lira (TRY) with the intraday decline on 10 August at one point hitting 20% against the US dollar. As the dust settled, the lira, which started the year at 3.76 per US dollar, ended the trading week at 6.43 per US dollar; a decline of…

United States: The tariff inflection point

Economy has strong cyclical momentum Increasing cost pressures could lead to higher corporate investments… … But tariffs are boosting inflation and creating an uncertain business environment I expect growth rates to taper off in comings quarters, but uncertainty is high Federal Reserve continues monetary tightening, but with pushback from President Trump   180807 United States…

An important milestone for Greece

Greece exits the ESM-program in August with a sizeable cash buffer No hair-cut to outstanding debt, but more lenient terms Fiscal targets run until 2060 Structural reforms are essential to private-sector growth Long-term debt sustainability is an issue for future generations   An important milestone for Greece   Related documents: Statement from the Eurogroup Greece…

US economy is ignoring the noise

The US short-term growth outlook is very strong… … despite increasing headwinds from trade tensions Consumers are buoyed by rising income and net worth Fiscal policy adding to growth in 2018 and 2019 Federal Reserve to continue tightening cycle   US economic update (June 2018)  

Is the European glass half full or half empty?

Confidence indicators in the euro area have weakened during winter, but levels are still healthy. Economic fundamentals are strengthening with declining unemployment. GDP-growth looks to stay above 2%, and ECB to take further steps towards normalization from mid-2018. Dependence of foreign demand and lack of labor are increasing risks.   Report: Is the European glass half…

United States: Deficits as far as the eye can see

The new ten-year budget projection from the Congressional Budget Office confirms what we already knew: The US fiscal trajectory is unsustainable under current law. Increasing mandatory spending and interest outlays combined with unfinanced tax cuts are pushing up longer-term deficit projections. The federal debt is projected to rise from 77% of GDP in 2017 to…

An introduction to the US midterm election

The US midterm election is not until November, but the selection of candidates is already well under way. Democrats have been encouraged by a host of recent election victories, but President Trump is a formidable opponent. If Democrats gain control of a chamber in the federal Congress, the legislative side of the Trump presidency is basically…

Euro area: It is time to say goodbye (to QE)

The European Central Bank faces a huge challenge in the months ahead as monetary policy has to be recalibrated to reflect a post “whatever it takes”-world. The financial turbulence in recent days highlights how difficult it is to roll back the extremely easy monetary policy, but ECB must respond to the improved economic circumstances to…