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Macroeconomic & Geopolitical

September Macro Dashboard

30 September 2019 - 15 min read

Global leading indicators ticked up slightly in August, but remain in contraction territory. While global growth has slowed, risks are tilted to the downside. The mounting toll of higher trade costs, decreased investment and dwindling confidence are weighing on growth.


The OECD lowered its global growth forecast for 2019 again in September, citing rising trade tensions and policy uncertainty.

  • U.S.—Consensus estimates for 3Q19 growth indicate a return to a more tepid pace of growth. Although a gloomier global growth outlook continues to weigh on trade and investment, the consumer remains a stalwart. The labor market still shows signs of strength with ample job opportunities and growing wages. Furthermore, lower mortgage rates and still strong consumer confidence are boosting the housing sector. Altogether, the U.S. economy remains a relative outperformer compared to the other major economies of the world.
  • Europe⁠—Recent data suggests moderate, but positive growth in 3Q19. The growth slowdown reflects weakness in international trade, which is chiefly affecting the euro area manufacturing sector, especially in Germany. At the same time, growth is supported by the resilient services and construction sectors, easier financing conditions and continued employment and wage gains. The unsettled Brexit issue still lingers over the economic growth outlook for the EZ and UK.
  • Japan⁠—The focus for economic growth will be on the sales tax hike scheduled for October 1. Although recent growth has been weak and some front-loading of consumption has taken place, efforts have been made by the government to prevent sharp swings in consumer spending.
  • China⁠—Although PMIs stabilized some in August, trade and activity data continued to underperform, increasing concerns that the economic outlook will continue to deteriorate. Credit growth seems to be supportive with the central bank cutting its reserve ratio in September.

Central Banks

Global central banks are keeping monetary policy very accommodative to offset downside risks to economic growth.

  • Fed⁠—Rate markets expect the FOMC to cut more aggressively than the Fed is signaling.
  • ECB⁠—Dovish moves in September include a lower deposit rate, restarting quantitative easing and offering more favorable bank lending terms.
  • BOE⁠—Monetary policy settings remain on hold while the Brexit issue remains unsettled.
  • BOJ⁠—Maintains accommodative policy settings despite stimulus efforts showing little impact boosting prices.
  • PBOC⁠—Cut the reserve ratio in September, but focused on balancing countercyclical support with rising property risks.


Following a 25 bps cut at the September FOMC meeting, the Fed is guiding toward one more rate cut through the end of 2020. However, rates markets are pricing in a more aggressive easing cycle. The Fed Funds/10Y curve remains inverted by 19 bps, while the 2s/10s UST spread remains very flat at just + 4 bps. Recession concerns linger as the inversion persists. The current Fed Funds rate continues to be an outlier relative to the policy rates of other major central banks. Globally, inflation measures remain subdued giving central banks adequate flexibility.


A relatively better U.S. economy with higher interest rates and a deteriorating global growth outlook continue to support the USD. The Fed needs to balance the strength of the U.S. economy and risks a strong USD presents to an already weak global growth outlook as it considers policy changes. Gold continues to be supported by global growth uncertainties and the explosion of negative yields. Oil prices had a short-lived rally resulting from the attack on Saudi production facilities, but fundamentals seem to have retaken the narrative and moved prices lower.

Geopolitical Risks

  • U.S./China trade war; threat of additional tariffs on other countries
  • Brexit uncertainty
  • Rising Middle East tensions
  • Wild Cards: Iran, North Korea; Venezuela; Argentina; new Russia sanctions; global supply chain disruption

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