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Global Debt Jumped to Record $237 Trillion Last Year
April 9, 2018--Norway, Canada, Sweden, China exceed pre-crisis debt levels
Debt as a percentage of GDP fell thanks to strong growth
Global debt rose to a record $237 trillion in the fourth quarter of 2017, more than $70 trillion higher from a decade earlier, according to an analysis by the Institute of International Finance.
Cracks Form in Global Growth Story, Rattling Investors
April 8, 2018--Investor confidence has flagged amid fears that a long-expected global synchronized surge may be turning into a synchronized stall
Stock-market investors, already grappling with the tech rout and the threat of a trade war, are starting to reassess a fundamental premise of the powerful rally-that world-wide economic growth is on the verge of blasting out of a long period of weakness.
The world's major economies started to pick up steam together last year, in a break from years of sluggish post-crisis growth in which the U.S. often seemed like the lone bright spot.
Russell Investments Insights-2018 Global Market Outlook-Q2 update
April 6, 2018--Volatility is back, the U.S. Federal Reserve (the Fed) is picking up the pace of hiking and trade-war threats are increasing. But global growth is still strong and the U.S. economy is getting a jolt of fiscal stimulus.
The tailwinds still outweigh the headwinds for now; however, this balance could shift as the year progresses.
Key global market outlook highlights
Fiscal stimulus adding to already strong global growth momentum
Central banks becoming more hawkish, with the U.S. Federal Reserve potentially hiking four times this year
Global equities could still push higher before facing headwinds later in the year.
view the 2018 Russell Investments Shifting winds 2018 Global Market Outlook-Q2 update
IMF Working paper-Globalization and the New Normal
April 6, 2018--Summary:
This study expands the empirical specification of Cerra and Saxena (2008), and allows short-term output growth regimes to be determined by globalization. Relying on a non-linear dynamic panel representation, it reconciles the earlier results in the literature regarding the two opposite narratives of the effects of globalization on output growth.
Countries experience higher growth, on average, the more open and integrated they are into the world. However, once they reach a certain globalization threshold (endogenously estimated), countries may also experience a new normal, persistently lower short-term output growth following a financial crisis. The benefits, as well as vulnerabilities, accrue earlier in the globalization process for low- and middle-income countries. To solely reap the globalization benefits on growth, sound policies should be in place to mitigate the negative effects stemming from increased vulnerabilities brought by globalization.
view the IMF Working paper-Globalization and the New Normal
IMF Working paper-A Primer on Managing Sovereign Debt-Portfolio Risks
April 6, 2018--This paper provides an overview of sovereign debt portfolio risks and discusses various liability management operations (LMOs) and instruments used by public debt managers to mitigate these risks. Debt management strategies analyzed in the context of helping reach debt portfolio targets and attain desired portfolio structures.
Also, the paper outlines how LMOs could be integrated into a debt management strategy and serve as policy tools to reduce potential debt portfolio vulnerabilities. Further, the paper presents operational issues faced by debt managers, including the need to develop a risk management framework, interactions of debt management with fiscal policy, monetary policy, and financial stability, as well as efficient government bond markets.
view the IMF Working paper-A Primer on Managing Sovereign Debt-Portfolio Risks
IMF Working paper-Understanding the Macro-Financial Effects of Household Debt: A Global Perspective
April 6, 2018--We confirm the negative relationship between household debt and future GDP growth documented in Mian, Sufi, and Verner (2017) for a wider set of countries over the period 1950-2016. Three mutually reinforcing mechanisms help explain this relationship.
First, debt overhang impairs household consumption when negative shocks hit. Second, increases in household debt heighten the probability of future banking crises, which significantly disrupts financial intermediation. Third, crash risk may be systematically neglected due to investors' overoptimistic expectations associated with household debt booms. In addition, several institutional factors such as flexible exchange rates, higher financial development and inclusion are found to mitigate this impact. Finally, the tradeoff between financial inclusion and stability nuances downside risks to growth.
DECPG Global Weekly
April 6, 2018--Taking Stock
U.S. non-farm job growth slowed in March; March PMI eased slightly. U.S. non-farm payrolls increased by 103,000 in March, well below market expectations. February's non-farm payrolls were revised up from 313,000 to 326,000.
The labor force participation rate edged down to 62.9 percent, while the unemployment was stable at 4.1 percent in February (Figure 1). Average hourly earnings rose 2.7 percent (y/y), slightly up from 2.6 percent in February. Separately, the U.S. Institute for Supply Management (ISM) service purchasing managers' index (PMI) fell to 58.8 in March from 59.5 in February. The ISM
manufacturing PMI also dropped in March, to 59.3 (Figure 2), although the reading remains consistent with robust growth.
Will geopolitical factors have an effect on oil prices?
April 5, 2018--The trade war was expected to bring prices up these past few weeks, especially for oil.
But according to UAE's Energy Minister, Suhail Al Mazrouei, this might, in fact, be very unlikely.
"It may affect the cost of drilling, the cost of completion, but I think overall the effect is going to be minor to the oil prices," and added, "I’m not that concerned about a trade war getting to the oil market."
IOSCO issues recommendations to improve regulatory reporting and transparency in corporate bond markets
April 5, 2018--The Board of the International Organization of Securities Commissions (IOSCO) published today its recommendations for improving the information on secondary corporate bond markets available to both regulators and the public.
The recommendations seek to ensure that regulators have better access to information so they can perform their functions more effectively, and to enhance cross-border information sharing and understanding. The transparency recommendations aim to support the price discovery process and facilitate better informed investment choices.
