Asian frontier-market economies need to refinance a significant amount of external liabilities over the coming year. Their sovereign fundamentals are not too concerning, but the timing isn’t ideal, given the risk-averse market environment and potential political noises. Investors should closely monitor these risks in order to fully capture the opportunities that the new bond issuances may present.
The Fed and rates: “When you come to a fork in the road, take it”
Policymakers have laid out a path that leads to the start of policy rate normalization in the US. Now, data indicating substantial and sustained labor market gains are signaling that its time to raise rates. Will policymakers instead choose a different path? We don’t think so.
Taking stock: growth and employment in the Euro area
The euro-area economy is clearly on the mend, but output remains below its pre-crisis peak and unemployment is still too high. This reflects the deep scars left by the global financial and sovereign-debt crises, and the journey back to “normal” is likely to be a long one, in our view. Against this backdrop, monetary policy will have to remain loose, or looser, for some time to come.
Global Economic Outlook – September
Global Economy—Global growth remains modest, but turmoil in emerging markets has raised the near-term risks.
United States—The US economy remains on solid ground, and monetary policy normalization should start soon.
Europe—Although the euro-area recovery is still broadly on track, downside risks have risen, as has the probability that the European Central Bank (ECB) will decide to extend its QE program.
Japan—The economic risks have increased, but our core view remains largely unchanged.
China—No “big bang” approach to policy stimulus, but more fiscal and monetary support and restored currency stability should reduce fear.
