_thumbnail_id: Array
author: Array
_author: Array
article_modules: Array
_article_modules: Array
modules: Array
_modules: Array
modules_2_download_box_download_box_title: Array
_modules_2_download_box_download_box_title: Array
modules_2_download_box_download_box_button_text: Array
_modules_2_download_box_download_box_button_text: Array
modules_2_download_box_download_box_button_url: Array
_modules_2_download_box_download_box_button_url: Array
modules_1_title: Array
_modules_1_title: Array
modules_1_download_box_download_box_title: Array
_modules_1_download_box_download_box_title: Array
modules_1_download_box_download_box_button_text: Array
_modules_1_download_box_download_box_button_text: Array
modules_1_download_box_download_box_button_type: Array
_modules_1_download_box_download_box_button_type: Array
modules_1_download_box_download_box_button_url: Array
_modules_1_download_box_download_box_button_url: Array
modules_1_download_box: Array
_modules_1_download_box: Array
modules_2_quote_author: Array
_modules_2_quote_author: Array
modules_2_enable_tweet: Array
_modules_2_enable_tweet: Array
modules_2_quote: Array
_modules_2_quote: Array
modules_3_title: Array
_modules_3_title: Array
modules_3_content: Array
_modules_3_content: Array
modules_4_title: Array
_modules_4_title: Array
modules_4_content: Array
_modules_4_content: Array
modules_5_background_image: Array
_modules_5_background_image: Array
modules_5_video_title: Array
_modules_5_video_title: Array
modules_5_video_thumbnail_url: Array
_modules_5_video_thumbnail_url: Array
modules_5_video_url: Array
_modules_5_video_url: Array
modules_5_video_duration: Array
_modules_5_video_duration: Array
modules_5_video_description: Array
_modules_5_video_description: Array
modules_5_video_embed_code: Array
_modules_5_video_embed_code: Array
modules_6_title: Array
_modules_6_title: Array
modules_6_content: Array
_modules_6_content: Array
modules_5_image_caption: Array
_modules_5_image_caption: Array
_yoast_wpseo_content_score: Array
article_modules_1_download_box_download_box_title: Array
_article_modules_1_download_box_download_box_title: Array
article_modules_1_download_box_download_box_button_text: Array
_article_modules_1_download_box_download_box_button_text: Array
article_modules_1_download_box_download_box_button_type: Array
_article_modules_1_download_box_download_box_button_type: Array
article_modules_1_download_box_download_box_button_url: Array
_article_modules_1_download_box_download_box_button_url: Array
_yoast_wpseo_primary_category: Array
_wp_old_slug: Array
_yoast_wpseo_title: Array
page_summary: Array
_page_summary: Array
article_modules_2_title: Array
_article_modules_2_title: Array
article_modules_2_content: Array
_article_modules_2_content: Array
_yoast_wpseo_focuskw_text_input: Array
_yoast_wpseo_focuskw: Array
_yoast_wpseo_linkdex: Array
article_primary_tag: Array
_article_primary_tag: Array
_wp_old_date: Array
_yoast_wpseo_metadesc: Array
article_modules_3_title: Array
_article_modules_3_title: Array
article_modules_3_content: Array
_article_modules_3_content: Array
article_modules_4_title: Array
_article_modules_4_title: Array
article_modules_4_content: Array
_article_modules_4_content: Array
_dp_original: Array
_edit_lock: Array
_edit_last: Array
article_modules_1_title: Array
_article_modules_1_title: Array
article_modules_1_content: Array
_article_modules_1_content: Array
article_modules_0_title: Array
_article_modules_0_title: Array
article_modules_0_description: Array
_article_modules_0_description: Array
article_modules_0_background_type: Array
_article_modules_0_background_type: Array
article_modules_0_background_image: Array
_article_modules_0_background_image: Array
article_modules_0_background_video: Array
_article_modules_0_background_video: Array
article_modules_0_link_options: Array
_article_modules_0_link_options: Array
article_modules_0_link_options_combine: Array
_article_modules_0_link_options_combine: Array
article_modules_0_video_link_text: Array
_article_modules_0_video_link_text: Array
article_modules_0_video_title: Array
_article_modules_0_video_title: Array
article_modules_0_video_thumbnail_url: Array
_article_modules_0_video_thumbnail_url: Array
article_modules_0_video_duration: Array
_article_modules_0_video_duration: Array
article_modules_0_video_url: Array
_article_modules_0_video_url: Array
article_modules_0_video_description: Array
_article_modules_0_video_description: Array
article_modules_0_video_embed_code: Array
_article_modules_0_video_embed_code: Array
article_modules_5_title: Array
_article_modules_5_title: Array
article_modules_5_content: Array
_article_modules_5_content: Array
modules_0_module_title: Array
_modules_0_module_title: Array
modules_0_form_shortcode: Array
_modules_0_form_shortcode: Array
modules_0_theme: Array
_modules_0_theme: Array
modules_0_content: Array
_modules_0_content: Array
modules_1_module_title: Array
_modules_1_module_title: Array
modules_1_background_color: Array
_modules_1_background_color: Array
modules_1_module_type: Array
_modules_1_module_type: Array
modules_1_filter_posts_by_taxonomy: Array
_modules_1_filter_posts_by_taxonomy: Array
modules_1_filter_posts_by_tags: Array
_modules_1_filter_posts_by_tags: Array
modules_1_link_text: Array
_modules_1_link_text: Array
modules_1_link_url: Array
_modules_1_link_url: Array
modules_2_text: Array
_modules_2_text: Array
modules_3_module_title: Array
_modules_3_module_title: Array
modules_3_background_color: Array
_modules_3_background_color: Array
modules_3_column_ratio: Array
_modules_3_column_ratio: Array
modules_3_editor_content_left: Array
_modules_3_editor_content_left: Array
modules_3_button_text_right: Array
_modules_3_button_text_right: Array
modules_3_button_type_right: Array
_modules_3_button_type_right: Array
modules_3_button_url_local_right: Array
_modules_3_button_url_local_right: Array
Themes from Chatham’s annual economic overview

Themes from Chatham’s annual economic overview

Jackie Bowie Chatham February 2019
China is slowing, but we are unlikely to be headed for a global recession
  • Market concern about a slowdown in China is rather misplaced. Domestic slowdown will bottom out soon and the trade war between the US and China will reach a truce with a resolution that will save face on both sides.
Should markets take Jay Powell’s dovish volte-face to heart?
  • The Fed’s recent dovish statements indicated fewer rate hikes this year than were previously expected and the short end of the yield curve has fallen accordingly. But there is a genuine risk that the Fed may end up behind the curve.
  • Continued strong consumer spending on the high street supports a good growth story and so does wage growth. For the last 30 years, hourly earnings growth has been one of the most consistent predictors of Fed monetary policy. It is now rising sharply. This will exert pressure on inflation and may force the Fed into another U-turn.
European growth – green shoots, but not much fruit
  • After a promising 2017 in which Eurozone growth significantly exceeded expectations, 2018 was not a shining point.
  • Germany and Italy fell into technical recessions in Q4 2018, and exports have been hit by Brexit.
  • Nevertheless, unemployment continues to fall and wage pressures are building.
  • There is a small risk that the resulting inflationary pressures may prompt the ECB to finally raise rates towards the end of 2019.
Brexit clouds continue to dominate UK business sentiment
  • Spending delays and the associated suppression of GDP growth have been the most visible impacts of Brexit on businesses to date.
  • On the positive side, this has resulted in businesses hoarding cash, which may fuel short term spending once more clarity is provided on the terms of the UK’s withdrawal.
  • The anticipated benefit of a weaker currency has not materialised in export figures, largely due to sterling’s fall not being fully reflected in end prices.
  • The central case scenario is a “soft Brexit” style deal is struck – but only at the final hour before the deadline.
  • A soft Brexit deal would significantly increase the probability of one (possibly two) rate hikes from the Bank of England in 2019.
G10 currencies – from divergence to convergence
  • 2018 was a story of USD strength, as the US economy and interest rate outlook powered ahead and diverged from the other main economies.
  • In 2019, “convergence” is likely to be the buzzword, with the US fiscal stimulus starting to run out of steam and other economies catching up.
  • Historically, the USD has tended to depreciate under these circumstances.
  • Current costs to hedge future sales of USD are very high, and these will fall as buoyancy is removed from the currency, which bodes well for both EUR and GBP strength against the dollar.

In summary, a fairly positive outlook and certainly not the recessionary viewpoint reported by the broader media. That said, risks remain. The Fed may end up behind the curve on its tightening of monetary policy and the market could be taken by surprise if rate hikes from the ECB and the BoE occur later in the year.

Sign up to receive our insights

Recent Insights

Contact us

If you need hedging or debt advice or would like to speak to the team, please get in touch.