Broad liquidity holdings of UK households and non-financial firms are growing at the fastest pace since the 2008-09 recession, supporting optimism about economic prospects and strengthening the case for an early interest rate rise. The Bank of England’s preferred broad … Read More
GDP revisions to be published by the Office for National Statistics (ONS) on 30 September will reveal significantly stronger growth in recent years, helping to explain the “productivity puzzle” and confirming that the double / triple dip scares of 2012 … Read More
Global real narrow money continued to slow in July, suggesting dimming prospects for economic growth next spring, allowing for the usual lead. Six-month growth of real (i.e. consumer price-adjusted) narrow money in the G7 and emerging E7 economies is back … Read More
US inventories have risen to an elevated level relative to sales, suggesting that the 3-5 year Kitchin stockbuilding cycle is about to turn down. Together with slowing real narrow money expansion, this casts doubt on 2016 growth prospects. A post … Read More
UK household spending is as extended relative to income as in the late 1980s and mid 2000s, ahead of the 1990-91 and 2008-09 recessions. Those earlier episodes were associated with rapid and unsustainable credit growth; current spending excess, by contrast, … Read More
Current negative sentiment in markets reflects perceived US / Chinese economic divergence. Chinese weakness is widely thought to be intensifying, dragging down global growth, while the US economy is deemed sufficiently solid to keep the Fed on track for an … Read More
Chinese monetary trends suggest an improving economic outlook. With recent easing measures yet to have their full impact, money growth may lift further during the second half. The preferred monetary aggregate here is the narrow “true M1” measure, comprising currency … Read More
Investors have been fearful of the market fallout from a rise in US official rates in September or December. In the event, it has been the unfixing of another central bank-controlled price – the RMB / US dollar exchange rate … Read More
Bank of England Governor Mark Carney managed to suppress hawkish dissent at the August MPC meeting but the latest Inflation Report forecast creates a strong presumption in favour of an interest rate rise before year-end. It was always unlikely that … Read More
Previous posts suggested that global economic growth would revive from mid-2015, reflecting stronger developed-world demand following a pick-up in real money expansion in late 2014 / early 2015. Incoming business survey results are consistent with this forecast. The first chart … Read More
Simon Ward is Henderson's chief economist. He has worked as an economist in financial markets for over 20 years and believes that changes in monetary conditions are a key driver of both the economic cycle and movements in financial markets; accordingly, a forecasting approach emphasising monetary analysis has a better chance of success.
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