Capital Economics

Fears about US recession are fuelling volatility in financial markets, sending stock prices and bond yields sharply lower. But how justified are these fears? And do moves in asset prices point to a fundamental shift or a temporary blip in the market environment? Earlier today our US and Markets economists held this special online briefing all about what’s happening in the US economy. Watch on-demand now: https://lnkd.in/eDCzhkyc #useconomy #recession

Is the US economy heading for recession? In a fraught day for global markets, Group Chief Economist Neil Shearing tackles the big questions facing investors. He draws on the latest reading of our US Scenarios dashboard to show if investor concerns sparked by last week’s employment data releases are justified before explaining how the Fed and other central banks are likely to respond to the carnage. Read Neil’s latest weekly note: https://buff.ly/3MdoPGt Learn more about our US Scenarios dashboard and find out how our enhanced data capabilities can support your decision-making: https://buff.ly/3LUi63U #useconomy #financialmarkets #recession

If implemented in full on day one, Donald Trump’s trade, immigration and fiscal policies would together be stagflationary. We don’t think they will be pushed through in full though. Read our in-depth guide to the rhetoric and the reality of Trump’s campaign pledges. Download this exclusive report now. https://lnkd.in/en2SfTEK #useconomy #uselection #trumponomics

📢 Slightly different format for our latest weekly podcast: with stock markets selling off in the face of that grim July payrolls report, Group Chief Economist Neil Shearing and Deputy Chief Markets Economist Jonas Goltermann discuss US recession fears and what they mean for the market outlook. During this discussion, they touch on the key issues in the market at the moment, including: - The key data to watch from here to gauge whether we're heading for a US recession; - If recent data could prompt more aggressive easing from the Fed; - What's left of the Big Tech-AI narrative that's done so much to drive the US market higher. Listen and subscribe to The Weekly Briefing from Capital Economics: Spotify: https://buff.ly/4dpGO80 Apple: https://buff.ly/3SBQioO

This week I updated our EM financial risk indicators for Q2. Risks and vulnerabilities have continued to ease across the EM world, but there are some pockets of concern. These are the key stories: - EM #currency risk has fallen to a multi-year low, largely reflecting higher FX reserves and stronger balance of payments positions. There have been especially large falls in Turkey (to a three-year low) and Pakistan (eight-year low). Argentina remains at very high risk of large FX depreciation. - #Sovereign debt risks have eased across Africa as external debt coverage has improved, but risks remain high in some frontiers and have continued to build in parts of Latin America, including Mexico (where our fiscal risk indicator is at a two-decade high). - #Banking risks generally remain low and there's no EM that we currently classify as "high" risk of a crisis. Even so, vulnerabilities are creeping higher and worth monitoring in some countries, including Russia and Saudi Arabia. We published an in-depth report looking at risks in 50+ EMs and updated our data dashboard. We'll discuss EM risks in an online briefing for clients on Thursday 8th August. For access to these indicators or for more information please get in touch. EM Financial Risk Indicators | https://lnkd.in/eCru_fMc EM Drop-In (8th August) | https://lnkd.in/eTyQhCSm

After correctly calling the BOJ’s decision to raise rates for a second time this year, publishing analysis about why another hike could come in October and answering client questions in an online briefing, the economist team explained what this all means for the yen, JGBs and Japanese equities. One striking point in their analysis: despite fears about massive capital repatriation and associated global bond market volatility as Japanese rates rise, yield gaps could actually move against JGBs and in favour of other markets if the BOJ tightens more as the Fed eases. It’s all in the latest Capital Daily. If you’re not getting Capital Daily, you’re missing out on concise, timely insight into how macro forces are shaping market outcomes. It’s out every trading day and is just one way that we keep clients ahead of the curve: https://buff.ly/3LM8UOX #globaleconomy #bondmarket #bankofjapan

"Perhaps the most likely scenario is that the Chancellor unveils in the Budget on 30th October a combination of higher taxes (perhaps raising an additional £10bn a year) and slightly higher borrowing of about £7bn a year (0.3% of GDP) to fund the £16.4bn spending shortfall identified by the Chancellor". Deputy Chief UK Economist Ruth Gregory responds to Rachel Reeves' statement. Register now to read what it means for UK growth, inflation and the Bank of England: https://buff.ly/3LHbKVB #ukeconomy #fiscalpolicy

#Trump’s comments on the #Fed have brought the issue of central bank independence into the spotlight. This is not just a concern in the US but an issue that is rearing its head in a number of #EMs too. Two countries for investors to keep an eye on are #Brazil and #Colombia. Details here 👇 https://lnkd.in/etayuDnD

Deputy Chief North America Economist Stephen Brown speaks to CBS News about that Q2 US GDP print:

In their recent one-on-ones, online briefings and roundtables with clients, the same question has kept coming up for our Commercial Real Estate team: which of the US, Europe and UK will see the strongest recovery as market conditions improve? In response, the team is producing a stream of work giving clients comparative insight into how these markets are faring against each other. Kiran Raichura, our CRE lead, and Amy Wood, who’s in charge of covering the European market, were on our podcast to address some of the hot CRE questions of the moment, including which regions and sectors will lead and which will lag, and how much of a threat rising distress still poses. And while it’s now the UK’s time to shine, Amy explained why the US will likely be the longer-term outperformer. Listen to The Weekly Briefing from Capital Economics now or find it on Spotify and Apple: https://lnkd.in/gaTcJ3jH And don’t miss Amy’s short report on US outperformance: https://lnkd.in/gut44Mcj #usrealestate #useconomy #commercialproperty