Monitoring economic and financial developments in more than 40 countries helps us to develop rich narratives around the outlook for global and regional activity, employment and inflation. We release our research publications when we have something to say, not because it is the third Friday of the month. We aim to be provocative and insightful in our research, unafraid to challenge the mainstream view where we think it is lacking.
Our most recent publications are summarised below. To access our full publications or to browse through our publication catalogue, please contact us by [email protected]
Global Credit Perspective
When will bond investors recognise the inflationary threat? (September 2020)
A decade ago, Reinhart and Rogoff warned that elevated public debts would diminish the prospects for economic growth. A re-examination of this issue in the context of even greater public indebtedness turns the spotlight on inflation rather than growth. The debt vigilantes have become irrelevant in a world where government bonds are regulatory assets.Free Trial
Global Inflation Perspective
Who is really hedged against a sudden rise in inflation? (June 2020)
Disagreements over inflation expectations are running high. Even though the probability that global economies experience a period of deflation in the short term is very close to one, investors seem to downplay the chances of a multi-year inflationary backlash.
Feb/Mar 2021 - Real yields, real risks
Fed chair, Jay Powell, has vowed to keep monetary policy steady even as the economy improves and inflation begins to rise, pointing to the underutilisation of labour, among other things. Taking a leaf out of Janet Yellen’s playbook, he confided that he was unperturbed by the recent surge in Treasury benchmark bond yields. As the reflationary rebound takes shape, bond yields and inflation expectations are vying with each other for supremacy. A popular view is that the Fed will not tolerate nominal bond yields above 2 per cent, believing that this will harm a highly indebted economy, and impose a form of yield curve control. However, to handicap yields in this way risks leaving inflation as the clear winner: turning real yields negative again.Free Trial
Volatility and dispersion of nominal growth remains high
Annual global nominal GDP growth surged to 5.9 per cent in Q1, with a 4-percentage point improvement in real growth and a 1 percentage point gain in implicit inflation, to 3 per cent. Such was the outsized contribution from China that real growth weakened in more countries than it strengthened. Inflation rose in twice as many countries as it fell.Free Trial
Global Inflation Heat Maps
US inflation leads the way
Fiscal and monetary responses to the Covid crisis have boosted residential property prices in advanced economies, with spillovers to housing costs. In many cases, the impact on inflation from housing costs has yet to mature. Even though energy and transport impacts may be abating, this is not the end of the inflationary threat.
Global Credit Update December 2020
“Neither a borrower nor a lender be, for loan oft loses itself and friend …(Hamlet Act 1, Scene 3)”
Crisis-inspired policy responses have energised global credit growth, steepened yield curves and flattened credit spreads. For now, risk tolerance is high and all systems are go. A powerful nominal recovery is required to keep loans whole. Meanwhile, bondholders look anxiously over their shoulders, rightly fearing a resurgence of inflation.Free Trial