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加入“起点财经”微信群。Economic Research
Global Data Watch
October 19, 2018
JPMorgan Chase Bank NA
Bruce Kasman(1-212) 834-5515
bruce.c.kasman@jpmorgan
David Hensley(1-212) 834-5516
david.hensley@jpmorgan
Joseph Lupton(1-212) 834-5735
joseph.p.lupton@jpmorgan
markets continue to tighten and DM wage inflation has moved
up to a 10-year high. Although a firming in pricing power has
cushioned rising labor costs thus far, there is little evidence
that a material rebound in productivity is taking hold.
DM core inflation takes a nap
Viewed in this context, rising inflation is a constructive de-
velopment. Indeed, overall DM core inflation is still well be-
low 2% and is unlikely to become a broad central bank con-
cern anytime soon. The bigger risk relates to the recent sharp
slide in DM core inflation. DM core CPI rose at a 0.7% ar, in
the three months through September, its lowest pace in five
years (Figure 2). There are good reasons to fade this slide as it
reflects concentrated moves in US goods and Euro area ser-
vices. This message is reinforced by the signal from DM non-
fuel import prices, which have continued moving higher de-
spite EM slowing. Nonetheless, recent developments align
both growth and inflation risks to the downside.
This Mountain and I gaze at each other
The Chinese economy continued to lose momentum through
3Q18 but we still see the downshift bottoming in the coming
months as the impulse of policy actions taken since midyear
offsets building drags from the US trade war. As anticipated,
real GDP growth continued to slide last quarter—reaching an
expansion low of 6% annualized according to our seasonal
adjustment. The monthly activity data for September show a
mixed picture. Although factory output expanded a touch
more slowly than we had thought (0.3%m/m),private sector
demand growth continues to hold up well, with stronger-than-
expected gains in retail sales and private machinery invest-
ment. Infrastructure investment has yet to respond to the fiscal
impulse but we expect this to unfold in the coming months.
Although aggregate credit growth, in the form of total social
financing (TSF), eased modestly in September on a %oya
basis, the %3m/3m run rate picked up for the first time since
March as bank lending continues to accelerate and the slow-
ing non-bank lending—a policy goal—looks to have bot-
tomed (Figure 3). While the hints of a turn back up in the
credit cycle may yet again raise concerns about asset quality,
the near-term impulse supports our call for public sector FAI
to accelerate through the current quarter.
A bevy of DM central bank meetings
A number of major DM central banks meet over the next two
weeks, facing unique macroeconomic and political challenges.
Euro area growth remains above trend, but core inflation
also underperformed ECB expectations, remaining flat in
the year to date. Nonetheless, the ECB has held on to its
view that the fundamental supports for stronger growth re-
main in place and that the building blocks of higher core in-
flation have been laid. Support for this view comes from an
unemployment rate falling faster, and wage inflation rising
more,than the ECB anticipated. At next week’s policy meet-
ingwe expect officials to maintain a positive attitude and
they should get further support from a positive flash Octo-
ber PMI. But they are unlikely to provide new details on the
imminent end of QE and there is no reason to expect a
change in the enhanced forward guidance about the first
rate hike.
Economic developments are pushing the Bank of England
toward a hike. Despite the drag on business investment
from Brexit, UK GDP growth is running slightly above po-
tential, the labor market continues to tighten, and pay
growth is rising. However, Brexit uncertainty is likely to
constrain the MPC’s words and actions in the near term.
We think the UK and EU will reach a withdrawal agree-
ment in the coming weeks, but gaining political assent from
the UK Parliament is likely to be painful. At this stage it is
unlikely that the Commons will approve ratification at the
first vote, sparking a period of political volatility. Our best
guess is that assent will be granted in a subsequent attempt,
with the looming Article 50 deadline serving to change
MPs minds. Absent Brexit, the November inflation report
would bring a clear signal that the pace of interest rate in-
creases will accelerate. As things stand, the MPC likely will
qualify that signal to some degree. But if we are right that a
withdrawal agreement ultimately secures the necessary
support, we expect the BoE will be raising rates soon after-
ward.
Next week also brings policy meetings in Scandinavia. We
do not expect the Riksbank or the Norges Bank to act, but
both central banks are likely to hint that monetary tighten-
ing lies ahead. The Norges Bank hiked 25bp to 0.75% in
September, saying it planned to raise rates an additional111723
26
29101622
20152016201720182019
%3m/3m, saar
Figure 3: China total social financing
Source: J.P. Morgan, PBoC
Other TSF
Bank lendingEconomic Research
Global Data Watch
October 19, 2018
JPMorgan Chase Bank NA
Bruce Kasman(1-212) 834-5515
bruce.c.kasman@jpmorgan
David Hensley(1-212) 834-5516
david.hensley@jpmorgan
Joseph Lupton(1-212) 834-5735
joseph.p.lupton@jpmorgan
50bp per year. Since then, activity data have been strong
while core inflation surprised to the upside with the Sep-
tember reading at 1.9%oya. We expect officials to reaffirm
their previous guidance, with the next hike expected in
March. The Riksbank has left its policy rate unchanged at
-0.50% since February 2016. However, its forward guid-
ance has shifted to signaling a rate hike before year-end.
The economy is performing well and core inflation is now
in line with the Riksbank forecast. Policymakers are thus
likely to stress more forcefully that policy rate normaliza-
tion is set to start soon, consistent with our call for a De-
cember hike.
The Bank of Canada is on track to raise rates 25bp to 1.75%
next Wednesday. Officials are likely to modestly upgrade
their economic forecast in response to positive data and re-
duced uncertainty around NAFTA, while core inflation
continues to run near the 2% target. Policymakers are likely
to reiterate plans for gradual normalization and we continue
to look for a quarterly pace of rate hikes in 2019.
Markets ratchet up pressure on Italy
Italy tensions escalated this week as the European Commission
issued a harsh rebuke of Italy’s 2019 budget plan. If market
stress pushes spreads higher thegovernment strategy to use
stimulus to boost growth comes under pressure. Italian banks
are vulnerable and yields already are high enough to tighten
credit standards. If the government backtracks it would likely
suffer a significant decline in popularity so one option might be
to postpone some measures to limit conflict with the Commis-
sion until the European Parliament elections next May. Italian
populists claim that a surge in populist support in the elections
will lead to a change in the region’s fiscal framework. Populists
are indeed likely to do better in next year’s election, but this is
unlikely to lead to any change in the fiscal regime. Another
possibility is that the government falls. If this were to happen,
the most likely outcome would be the creation of an alternative
coa