We promise we’ve turned to a fresh week, even as we’re yet again left with little to go on in U.S.-China talks and are staring down another U.S. shutdown deadline.
And more disappointments in economic data, alongside softening inflation, are keeping central banks on a dovish path.
Here’s our weekly wrap of what’s going on in the world economy.
Let’s Make a Date
We got a few more nuggets this week that helped, but didn’t resolve, the guessing games around U.S.-China talks. The high-level gatherings in Beijing has made little progress so far, leaving much work to be done before President Donald Trump and his counterpart Xi Jinping look to seal a deal at a yet-to-be scheduled summit. Still, Trump said he’s willing to punt on further tariff increases that would’ve been triggered March 1, so long as there’s movement toward a “real deal.” That helped soothe those who were rattled this week by his offhand remark that he didn’t see a leaders’ meeting happening ahead of the deadline, while the U.S. side is eager for it. Adding to all the confusion, Trump’s strategy is quite socialist, when you look at it.
Policy doves are winning the year. New Zealand followed global cues this week, holding pat while pushing back projections for an interest-rate hike. Economists are betting that Switzerland’s lowest-in-world interest rate will stay there a bit longer. A disinflation wave is giving more fodder for the world’s emboldened doves, including in Australia and Britain. It’s making things a bit trickier in emerging markets. Soft inflation data in India has amplified calls for further rate cuts, but Indonesian officials insist rupiah stability is key, so they’re not as ready to take that path. And Turkey’s still fighting high-inflation demons.
Perhaps just to keep things interesting, the Fed was sounding a bit more upbeat this week, with Chief Jerome Powell giving the economy a “strong” label and noting its proximity to full employment. U.S. inflation is cooperating.
The (Sad) Beat Goes On
Policy makers are staring down a pile-on of bad data, and Europe is emerging as the biggest trouble spot, with Germany stagnating at the end of 2018 and continued trade tensions suggesting any pickup in the continent’s powerhouse economy could be muted. The weak growth dynamic is made more complicated in some places by electoral politics, and not even just because Brexit is still dragging on: Nicolas Maduro’s staying pat in Venezuela, keeping prospects cloudy for the economy to pull itself out of crisis. And Thailand has fresh political risk amid divisions over parties competing ahead of scheduled elections next month.
The labor market in South Korea is suffering its worst jobs tallies in nine years, and even an enviable economy in the U.S. is showing vulnerabilities in labor, housing, and auto debt.