The ECB badly mishandled its communications strategy in the run-up to today’s meeting, with comments from President Draghi and leaks about 20 different easing measures being under consideration encouraging market expectations of much more aggressive action than the announced 10 … Read More
Key UK money and credit measures continued to grow solidly in October, sending a positive message for economic prospects and supporting the case for an early rate rise. The Bank of England’s broad money measure, M4ex, rose by 0.4% in … Read More
Money supply analysis plays no role in policy formation under the current Monetary Policy Committee (MPC). Historically, policy-makers have run into trouble when they have ignored money and credit trends. Broad liquidity of households and non-financial firms is currently growing … Read More
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
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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