Macroeconomic & Geopolitical

To Trade or Not to Trade? That is the Question…

May 2020 – 3 min read
Despite rising tensions between the U.S. and China, the U.S. has signaled they won’t tear up the trade deal, yet. Inflation may be impacted by weaker demand and lower oil prices. The ECB weighs what to do next after Germany ruled its QE program violated its constitution.

Watchlist

Arrows indicate consensus forecast compared to the previous period. Local dates of release.
 

U.S.

  • Retail sales for April will likely be worse than March, given lockdown timing. Nonstore retail results amid closed storefronts will be a good e-commerce indicator.
  • Downward pressure from weakening demand and lower oil prices will likely lead to soft inflation data in April.

Europe

  • EZ Industrial production will likely show unprecedented drops in March. Data last week for the two biggest EU economies (Germany and France) showed the biggest drops ever recorded. Meanwhile, U.K. and EZ Q1 GDP figures are set to follow suit and contract sharply. However, GDP will likely worsen in Q2.

Asia Pacific

  • China activity data should improve in April as the economy moves slowly back towards normality. The pickup in consumer spending is likely to continue lagging the return to offices and much of manufacturing. Meanwhile, we watch for China’s inflation data as external demand weakens as internal demand is improving.

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Christopher Smart, PhD, CFA

Chief Global Strategist & Head of the Barings Investment Institute

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