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The Macro View – November 2016

United States

  • According to preliminary estimates, the U.S. economy expanded by a solid 2.9% in the third quarter of 2016.
  • Consumption grew at a moderate 2.1%, while an inventory build and a surge in exports helped support headline growth.
  • The U.S. labor market remains in good condition as job creation has been solid and the number of people filing for jobless claims is quite low.
  • We continue to see gradual improvement in the housing sector, while the manufacturing sector seems to be stabilizing after a rough start to the year.

International

  • According to preliminary estimates, the U.K. economy grew by 0.5% in the third quarter, surpassing market expectations.
  • For now, the U.K. economy is holding up well. However, it is still too early to evaluate the medium to long-run impact. Thus, recent data has to be interpreted with a grain of salt.
  • The Eurozone economy continued to bump along during the month of October, with risks to growth still prevalent.
  • The Eurozone unemployment rate was steady at an elevated 10.0%, while inflation continues to be running well below the official target.
  • Economic data out of China has been relatively robust. However, China‚Äôs currency continues to weaken versus the U.S. dollar as development continues to warrant attention.

Global Monetary Policy

  • Monetary policy remains exceedingly accommodative by any historical measure.
  • The Fed voted to leave policy unchanged, but the table is set for a hike in December barring any unforeseen exogenous shock.
  • The Bank of England also voted to leave policy unchanged, highlighting the limited appetite for above target inflation that will likely be sparked by the recent decline in pounds.
  • In general, developed market central banks seem to be shifting toward policies that help create steeper yield curves.

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