BofAML: el tira y afloja de la Fed (Global Economic Weekly)

Redacción - Viernes, 28 de Agosto

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Global Economic Weekly: The Fed gets tugged • The Fed is overseeing healthy growth in the US, but the global outlook has worsened. •  Our simulations suggest that contained market corrections do not affect the US outlook materially. •  The Fed will likely hike in September if markets settle down and the data remain solid.

Global: the Fed gets tugged

The Fed will likely hike in September if markets settle down and the data remain solid.

United States: stock shocks, the economy and the Fed

The stock market correction could delay the timing of the first rate hike if volatility remains high going into the September 17th meeting. However, ultimately the economy will drive the Fed. Unless the market volatility signals a sharp weakening in growth, any delay is likely to be short-lived.

Europe: ECB preview - words now, but action to follow

We expect talking dovish to be the ECB's first port of call next week, as it is hard to get more in September beyond some minor tweaks. In our view, avoiding more euro re-appreciation is the short run priority. The ensuing revision in the ECB's inflation trajectory will force the Governing Council hand on beefing up QE by year end.

Japan: economy's sensitivity to market fluctuations

As our main scenario, we do not expect major fiscal stimulus or additional monetary easing. But based on the Japanese economy's sensitivity, a 10-15% or greater sustained decline in stock prices or appreciation of the yen could urge the government/BoJ to take actions.

Emerging Asia: taking the economic pulse

We believe that Emerging Asia will likely face tougher times ahead, as economic and export growth continue to falter. That said, policymakers still have space for stimulus, in our view. Asian central banks are better-prepared to deal with challenges as they have been proactive in keeping leverage in check.

Emerging EMEA: China sweet and sour

While a weaker Chinese economy is overall negative for EM, it does benefit consumers in several markets, and these benefits tend to be underestimated. Poland is the new main winner of lower energy prices given rising credit and wage growth trends, while Turkey's benefits are weakening.

Latin America: we are not in Kansas anymore

There is no shortage of pessimism on LatAm these days. Even though the external shock that South American countries are facing is large, the nature of the shock and of the domestic policies is much different from that of 1982, which led to the debt crisis. Except for countries such as Ecuador, Venezuela and - maybe - Argentina, the outlook is likely to involve slowdown rather than something more severe. The major risks to our view stem from these severe cases, from high corporate foreign currency debt, and from politics.

Australia / New Zealand: the antipodean recoupling

The Australia and New Zealand economies are being driven by commodity cycles. However, the New Zealand economy is less exposed than Australia's, and this will keep the RBNZ from having to ease monetary policy as much as has the RBA.

 

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