May Economic Update: Dining in the Rain | Report
Dining in the rain: the new symbol of freedom and optimism.
Carsten Brzeski gives his take on the global situation as most countries begin to ease lockdown restrictions
United States: the race for life
Unprecedented stimulus measures have taken U.S. economic activity a touching distance from pre-pandemic levels.
Euro zone: the recession is over
With a further contraction of GDP in the first quarter, the euro area experienced a double-dip recession. However, as the vaccination campaign gains traction, the locks can now be gradually lifted, heralding a strong recovery.
United Kingdom: Good times and economic recovery return as Covid-19 recedes
The decline in the prevalence of Covid-19 and widespread vaccinations have boosted confidence in the sustainability of the recovery.
China: deleveraging stimulated by the recovery
China’s economic recovery appears sustainable, although the high GDP growth figure is partly due to the weak base effect.
Asia: India – what’s wrong?
If there is one narrative that speaks of double mutations and Indian variants, mass gatherings, sporting events and religious holidays have likely also played a significant role in the recent acceleration of cases in India. There are very clear lessons to be learned from this. India may be considering another lost year for the economy
CEEC: Inflationary pressures continue to intensify in Central and Eastern Europe
Inflationary pressure is growing throughout Central and Eastern Europe, particularly in Poland and Hungary. The two central banks are reluctant to tighten; Poland should get away with it, but Hungary might be forced to hike.
FX: the normalization game
Currency markets entered in May dividing in the middle. Outperforming are commodity currencies. The underperformers are the low yielding defenses, with a very distant outlook for rate hikes.
Rates: the crazy relationship between inflation and yields
“Hey neighbor, here’s $ 100. Give me back $ 92 in 10 years and you’re fine. And don’t bother paying me interest.” This is the (real) bond market today, not in the euro zone’s reverse rate space, but in the United States, where, perversely, a macro boom is brewing.
Raw materials are buoyant, but supply issues are still a concern
Metal prices are flirting with record highs, agricultural markets have been trading at record highs for several years, and oil has experienced an impressive recovery.
Central bank update
As many developed markets tentatively begin to emerge from the Covid-19 pandemic, attention turns to a decrease and tightening in many economies.
Biden’s promise: to build back better and greener
Of the $ 4 billion in additional spending proposed by President Biden, $ 2.2 billion is expected to be invested in green and sustainability-related infrastructure. It marks a clear change in government policy that can be supported by regulatory changes and incentives