Growth is slowing down in Europe, China and event the USA where we saw for the first time since 2007, an inverted yield curve. The 10 year treasury is now lower than 3 months. What a change!
UK: BREXIT
Nothing to add to this amazing confusion. Now we have to wait and see what happens and what is decided over the coming weeks. The continuous change in direction is not good for the market and only benefits punters that plays the volatility. Overall, it is a difficult situation for the UK, SMEs, exporters and the economy.
Relating to the UK economy from November for 3 months until January 2019, growth was up by only 0.2% but 2019 forecasts are currently down to 1.2% (was 1.7%). February Inflation (CPI) was back up to 1.9% and unemployment decreased to 3.9%, which is its lowest level since 1974/75. Meanwhile, annual wage growth remained stable at 3.4% and that explains the slight rise in inflation.
To summarise, UK growth is more or less in the middle of the G7 countries pack, but everything is impacted by the Brexit negotiations and economic predictions are almost impossible, until the market has a better vision. Financial markets including GBP will remain volatile.
Money Market fund managers (25/03/2019) GBP weighted average maturity (WAM) is about 47 days (next BoE meeting is on the 2/05/2019) so, the market is not really favouring a rate increase...yet.
EUROPE:
Regarding the EU Zone (19), inflation was up 1.6% in January and unemployment unchanged to 7.8% (the same as December's revised level) but the Euro Zone's PMI has decreased to 47.6% in March, which is the lowest in nearly 6 years. However, growth projections for 2019 revised, is substantially down to 1.1% (It was 1.7% in December and in the fourth quarter of 2018 it was confirmed at only 0.2%).
In Germany, the economy is losing momentum with expected growth for 2019 down to 0.8% from 1.5%. Inflation is also down to 1.5% in February leaving the Purchasing Manager Index (PMI) to plunge by 44.7%, the steepest pace of contraction since 2012.
USA:
The 2019 Economic data for the US, still indicates a reasonably robust economy but the signs are not good particularly with the inverted yield curve indicating a strong slowdown in economy, and/or even a potential recession. Annual growth after 3% in 2018 is now expected to be as low as 2.1% in 2019, and around 1.8% in 2020. Unemployment fell to 3.8% in February and wage growth rose by 4% in January, while Inflation was up 0.2% by month over month in February after a flat reading in January; t increased to 2.1% year over year in February slightly below market expectations of 2.2%.
