In today’s briefing:
- ‘Stealth QE’ Continues At The Fed … Probably
- Singapore’s Cyclical Downturn Could Worsen Before It Gets Better
- The New “De-Risking” Equilibrium and Its Implications for Asia
- EUR Liquidity Watch – The ECB Will Have to Punish Governments More..
- UK: Desperate Policies for Disinflation
‘Stealth QE’ Continues At The Fed … Probably
- Fed Liquidity is trending higher through a ‘Stealth’ QE, despite latest dip in weekly numbers
- Liquidity is the key ingredient driving asset markets higher it pays investors to closely monitor these vital inflow of funds
- Fed Liquidity feeds into Global Liquidity, which includes the actions of other policy-makers, as well as the activities of private back and lenders. It has risen sizeably since late 2022
Singapore’s Cyclical Downturn Could Worsen Before It Gets Better
- The city-state’s cyclical downturn has further to go: external headwinds are strengthening while the post-pandemic bounce in domestic spending is flagging.
- Further uncertainties loom: major economies show signs of deceleration and pose risks to trade, while household consumption may be hit by cost-of-living worries. The domestic sector, however, exhibits respectable resilience.
- While inflation remains a concern, we observe a welcome easing of inflationary persistence. Expect monetary policy to stand pat for the short-term future.
The New “De-Risking” Equilibrium and Its Implications for Asia
- A new geopolitical equilibrium will see Washington and Beijing seeking to gain the upper hand against the other but using measured tactics to minimize risks of direct conflict.
- Hence the shift from hawkish talk of “decoupling” to a more measured “de-risking”: this means measures in selected economic sectors to reduce excessive dependence on China.
- Consequently, companies are already adjusting their behaviour, producing shifts in trade and investment flows, firm locational decisions, and corporate structures. Asian economies stand to make tactical gains
EUR Liquidity Watch – The ECB Will Have to Punish Governments More..
- The outlook for financial stability doesn’t look quite as good in Europe as hoped for.
- The ECB is trying to push governments to add liquidity, but they will have to do more
- European liquidity trends will prove to be outright abysmal over summer
UK: Desperate Policies for Disinflation
- High living costs are becoming increasingly problematic for the UK Conservative Party, which had been happy to paper over costly policies by stoking nominal value growth.
- Monetary medicine is a bitter pill that can only have its most acute side effects treated through forbearance. Blaming profiteering doesn’t help fix the problem.
- Ending trends from the pension triple-lock, proportional living wage hikes, and new environmental fees would help. The government has probably lost already.
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