The week in charts – Week 13

13. Base effects!

Eurozone inflation came in significantly lower than expected, mostly due to a bigger than anticipated drop in energy prices. Core inflation fell as well, but this has to do with Easter falling in April this year, but March last year.

12. ECB hike

Hence, most bets for a December rate hike by the ECB are off.

11. German boom

Meanwhile, the economic upswing grows stronger. The Ifo index, the bellwether of the German manufacturing sector, reached the highest level in almost six years.

10. Italian Boom

Well perhaps not a boom, but certainly an improvement. Even ‘no-growth’ Italy is speeding up.

9. Divergence

At some point even the ECB has to scale back its extraordinary monetary policy, right? But not just yet.

8. The Taper

It’s likely that the ECB’s first move to normalize policy is to (further) taper its bond buying program. But at what pace?

7. Liquidity drag

Whatever the pace, we should ready for a slow reduction of global liquidity. Something we haven’t seen to for almost a decade now.

6. Brexit arrives

It took nine months, but Brexit is finally here. Not that the German didn’t keep the door open until the very end!

5. Loss of correlation

So, will the UK fall in the abyss? We just don’t know. Some things are changing however, like a weakening GBP no longer translates into UK outperformance.


Firing your Finance minister, especially one that is well-respected by markets, is not always a good thing. The ZAR got hammered this week.

3. Chepreciation

Much slower, much quieter, but equally significant. China’s currency is down to the lowest level since the end of 2014.

2. Hangin’ in there

Oil is down to pre-Trump levels, the same holds for the US dollar, yields are down, but equities are hanging there. The reason? Non-Trump related growth surprises.

1. Bear coming?

Investors think not. Markets price in just a 10% chance of a market correction in the next 12 months.


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