Investing in the global economy

Posted by: Paul Donovan

24 Oct 2019
  • Eurozone and US business sentiment opinion polls are due. The gap between sentiment in reality is wider than normal (sentiment underperforming reality). However, manufacturing is affected by the slowdown in trade and investment. This inevitably focuses attention on manufacturing numbers, however unreliable.
  • Investment data is due from the US with capital goods orders released. Korean GDP data showed investment as a drag on the economy, but this was focused in construction. Business investment seemed more positive. The investment slowdown in response to trade uncertainty may now be levelling out.
  • The Federal Reserve has announced that the limits of liquidity injections in to the repo market will be raised. The Fed seems keen to avoid a repeat of recent interest rate spikes in reaction to liquidity shortages. The signal of the Fed's readiness to manage liquidity may matter more than the details.
  • Elsewhere, US President Trump has announced an intention to lift sanctions imposed against Turkey. The sanctions were less severe than markets expected, so reaction is likely to be limited. US jobless claims numbers are due. Cryptocurrencies have been volatile again – this has limited relevance to the real economy, but bursting any bubble involves some wealth transfer.

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