Global | Coronavirus Watch: A troubling V-shaped recovery
In an unwelcome development, global Covid case numbers are rising sharply again. Although this adds downside risk to our economic outlook, we aren’t downgrading our GDP growth forecasts for this and later years because upside risks balance the outlook.
The rise in Covid-19 cases has coincided with increased mobility and may therefore be an unfortunate side effect of a return to more normal levels of activity.
Compared to the peak earlier this year, the rise in case numbers looks less marked when weighted by GDP rather than population size. While this third peak is clearly a huge public health concern, it may be less economically significant at a global level.
Recent data confirm that the US economy is booming, which may help to counterbalance economic weakness emanating from the main coronavirus hotspots.
Eurozone: ECB minutes indicate that July rate hike is a near-certainty
The minutes from the April ECB meeting confirm the hawkish tilt initiated a few months ago continues to gain momentum. With a majority of the council increasingly concerned about the inflation outlook, this makes an interest rate hike already in July almost certain. This should not come as a surprise, however, as recent developments render hawks' case arguably easier to make.Find Out More
For how long will Japan’s households support bonds and the yen?
Households' financial surpluses sharply increased in 2020 and remained high in 2021 due to the Covid pandemic. Most of the surplus continued to go to cash and deposits, but there was a notable increase in funds going to investment trusts (with a large portion invested in foreign equities) in 2021. Amid rising international yield differentials and a weakening yen, there is market chatter about whether this is the beginning of a structural shift from households' risk-averse investment style?Find Out More