AB Economic Insights
Insights From Our Global Team of Economists
Efforts to reduce the central bank’s autonomy would likely disrupt markets.
Policy shifts may create an incentive to diversify.
We expect some slowdown in global economic growth in the second half of the year, with more policy easing across central banks, including the Fed.
Does US exceptionalism persist amid anti-US sentiment and structural concerns—and what does this mean for stocks, bonds and the dollar?
Proposed tax-cut extensions and higher debt costs could amplify fiscal concern.
What do investors need to know about tariffs?
Negotiating with one key trade partner is tough enough. Negotiating with two is highly testing.
President Trump’s tariffs bring déjà vu for the euro-area economy: it’s back to slower growth and lower rates.
How might the recently announced US trade measures translate into economic reality?
Trade wars threaten longstanding trade partnerships and could weigh on the global economy.
Global growth should continue to slow if US policy direction remains unclear. Inflation has waned but tariffs could boost prices in the near term. We expect most central banks to ease further yet more slowly. While broad uncertainty prevails, we don’t forecast a recession in any major economy for 2025.
After the trade war’s opening salvoes, tensions seem set to last for some time.
In 2025, active investors can find opportunities amidst upcoming policy changes and the evolving macro landscape. With healthy bond yields and potential beyond the dominant leaders of the US equity market, the journey ahead promises to be anything but smooth. However, disruption often paves the way for strategic maneuvering.
We expect inflation to continue to move lower and growth to slow, especially outside the US. A trade war looks almost certain, with some economic effect on the US but likely larger elsewhere. The good news is the Fed appears well-positioned to respond to emerging risks in either direction.
The range of potential economic outcomes is wide, but a solid starting point suggests resilience.
When the ECB’s rate-cutting cycle ends, should the neutral rate be far higher than pre-pandemic? Not in our view.
We take an early look at how a new policy platform could factor into the US deficit and debt.
Despite strong returns for both equities and fixed income investments this year, investors will need to be selective to find the best opportunities as markets move into a more normal economic environment. AB's Senior Investment Strategist, Walt Czaicki, highlights opportunities in this new landscape, such as healthcare and infrastructure companies, dividend-growth stocks, and high-yield bonds.
Our base case is for a somewhat rapid push by policymakers to get rates back to historic norms in the coming months. Barring an unexpectedly weaker global economy, we think central banks will have room to maneuver.
Demand growth is cooling, but evidence suggests that overall fundamentals are still sound.
Watch AllianceBernstein's Chief Market Strategist, Rick Brink, as he delves into the current economic landscape. We believe investors should remain focused in the third quarter, looking for opportunities to separate the signal from noise.
Earlier interest-rate cuts would come as good news for the US economy.
We don’t see evidence of market fragility, and a soft landing remans our base case. Further global disinflation could allow more monetary easing although geopolitics remain a constant risk.
Lasting fiscal deficits can exact a cost. Here’s how the situation is shaping up for the world’s economies.
Despite a sometimes-bumpy road, we continue to believe that the economy is headed towards normalization. However, capital markets started off 2024 driven by both hope and an element of fear.
Stronger economic growth is allowing the Fed to stay patient. That means a likely delayed start for expected interest-rate cuts.
The outlook for major economies remains positive, and central banks stand poised for easing. But we’re also watching the potential risks stemming from a global election cycle, which could heighten market volatility.
The Fed poured cold water on a March rate cut, but the underlying message still has rates coming down—by a lot. Waiting for the starting point can be risky for investors.
As normalization returns to markets in 2024, we expect inflation to return to the Fed’s target and for economic growth to moderate. Investors can still benefit from capital markets, but brace yourself for a rebalancing of asset prices.
Falling inflation hasn’t yet translated into good feelings among US consumers. Based on the latest data, that might be changing.
As European inflation rates converge with targets, markets expect rate cuts. But central banks are set on a decisive victory over inflation.
Markets enter 2024 on firm footing. Although we’re optimistic, there are still many reasons to be watchful—from geopolitical tensions to a tumultuous election cycle.
Despite a range of shocks, the global economy stayed resilient throughout 2023. What course will it take in 2024?
As we close the book on 2023, the theme of “resistance” should transition to “normalization.” Despite a challenging second half of the year, our assessment of the capital-markets landscape still shows opportunities in the stock and bond markets.
The US government has avoided a shutdown, but changing the fiscal trajectory requires tackling a sizable budget deficit, so fiscal policy should remain a friction point for the economy and markets.
Global economies confounded expectations of downturns last quarter, especially the US, where growth accelerated thanks to steady consumer spending. But with tighter credit conditions, normalizing labor markets and shrinking household savings taking shape, the next few quarters could become more challenging.
China’s growth has slowed, but the context is important—an intentional transition to a more balanced economy that relies less on investment and exports.
A third-quarter bump in consumer spending provided lift for the US, but the world’s economies are still on track for soft landings and mild recessions.
Resilient consumer spending has been a pillar of the US economy. While activity may soften, we think the consumer will help the coming slowdown stay mild.
The favorite in Argentina’s presidential election has vowed to eliminate the central bank and dollarize the economy. Which path will the country follow?
Recession? Soft Landing? Getting a read on where the US economy is headed hasn’t been easy.
The three themes in capital markets are: resolution, resistance, and normalization. After a strong start to the year there are risks in the current environment, but a bigger risk may be waiting.
The risk of an imminent economic hard landing is lower today than three months ago. Although a downturn remains possible it would likely be mild compared to history. Still, we see the global economy enduring a long period of below-trend growth through 2024.
Growth in developed economies has been resilient, thanks to strong labor markets. But with central banks likely to keep interest rates higher for longer, how long can that last?
Banking sector crises have historically been one of the key drivers of risk for EM countries' asset returns. Could the next banking crisis be in EM?
The Fed and the European Central Bank each raised interest rates by 25 basis points this week. The Fed may be done, but that's not the case in the euro area.
Investors are facing a multitude of market unknowns in 2023. A sound strategy over time has been to be selective and take advantage of well-researched opportunities that transcend near-term bouts of market volatility.
The banking crisis rattled investors yet was somewhat contained in short order. Inflation remains stubbornly high, with economic growth still healthy, thanks to strong labor markets. If the banking turmoil doesn't spread, an eventual recession should be mild, followed by a stronger outlook by year end.
Yesterday's Fed policy decisions indicate a somewhat optimistic view of the bank turmoil, but policymakers will be keeping a watchful eye on bank liquidity and lending.
Capital markets continue functioning well despite a hawkish US rate turn, but many investors still worry about the risk of a deeper spiral. We think that's an unlikely outcome.
2022 was one of the toughest years ever for markets. With markets reshaped and valuations lower, the opportunity set for 2023 has grown, but the devil is in the details.
The debate around the US debt ceiling is back again. Our base case is that Congress eventually will increase the debt ceiling, as it always has. But the process will be unusually messy this year.
This year will likely see a shift from extremely high inflation to worries about slumping growth. Conditions should be better than 2022, but the road will be bumpy.
We remain confident that the cumulative impact of rate hikes last year and early this year will be sufficient to bring inflation down. In 2023, we see slowing inflation stemming from shifting price pressures across three broad categories: goods, housing and services.
The Fed has indicated smaller rate hikes moving forward, but with inflation raging, investors should be prepared for an extended period of restrictive monetary policy.
The central market themes for the year continue to be: inflation, central bank tightening, and expectations of lower economic growth. After a volatile period, where are markets headed from here? AB's Senior Investment Strategist, Walt Czaicki, reminds investors that investing is a marathon, not a sprint.
High inflation is prompting central banks to keep raising rates. While inflation is putting immense pressure on the global economy, there are reasons to expect enough resilience to keep the coming downturn minor compared with past recessions.
Europe faces a difficult policy challenge in battling inflation while trying to relieve households and businesses from the pain of costly natural gas.
Fundamentals in Latin America's economies have been strengthening, though uncertainty surrounds the future path of government policies.
The global growth outlook has declined as central banks tackle inflation. What signs would point to an eventual rebound for the economy and markets?
Inflation remains persistent and central bankers responded with aggressively tighter monetary policy, which will mean slower growth. Although the near-term outlook is challenging, perspective is important. For example, not all economic downturns are catastrophic and households around the world are still on solid financial ground.
The Fed’s aggressive moves to tackle inflation will likely work over time. The cost will be lower economic growth and volatile markets, as investors digest the changing policy stance.
Major central banks face the challenge of high inflation and slowing growth-most pronounced in the UK. We expect volatile policymaking as officials try and split the difference.
A new shock to the global economy from Russia's invasion of Ukraine makes forecasting particularly difficult right now. Usually, geopolitical disruptions are quickly shrugged off, but we think the ongoing crisis will lead to lower growth and higher inflation than previously expected.
With inflation more intense and entrenched, the Federal Reserve has made it clear that it intends to respond with tighter monetary policy, which the US economy should be able to withstand.
The European Central Bank's surprise decision to accelerate its tapering plan is intended to strike a middle ground. In our view, it also increases the downside risk for the euro-area economy.
Russia's invasion of Ukraine has shocked the global economy, in particular by fueling further spikes in energy and commodity prices. How will these inflationary catalysts affect monetary policy in different regions?
The Bank of England is behind the inflation curve. With its recent actions, it's trying to avoid the need to take more drastic measures later.
COVID-19, the global economic driver for the last two years, may extend into early 2022. But its impact is evolving from largely a demand shock to a supply shock-with supply chains proving more fragile and businesses still struggling to source many key inputs.
Now that COVID-related threats to the global economy look to be receding, the risks from higher inflation are becoming more prominent.
The Federal Reserve kicks off its taper of US asset purchases later this month. But there’s a meaningful gap between the market’s inflation anxiety and the Fed’s wait-and-see approach to what it still views as a transitory challenge.
Major central banks seem ready to head back toward normal policy settings, given the economic rebound from the pandemic and an accompanying inflation surge. Global financial markets may be choppier as a result, but monetary policy will remain accommodative for some time-and the underlying growth outlook is strong.
Headline inflation is at a decade-high rate of increase, and core inflation of 4.0% is higher than it's been in over 25 years. But the economy is well on the road to recovery, and GDP growth is back to where it was pre-crisis. While we expect the Fed to taper in November, we think investor focus should be more on when the Fed ends quantitative easing rather than when they start tapering.
Global risk assessments have shifted since last quarter, with China property challenges and soaring UK energy prices dragging down investor sentiment. Widespread optimism has shifted to a less enthusiastic outlook, which now places most of the attention-and pressure-on the Fed's next moves in the coming weeks.
The ECB is likely to announce the end of its Pandemic Emergency Purchase Programme—but what will this mean for euro-area bond yields?
Could national currencies go digital? No, they wouldn’t be cryptocurrencies, but the Fed and other monetary policymakers are testing the waters of augmenting traditional currencies with digital versions. Who’s in the lead, and what challenges are central bankers working through?
COVID-19 has aggravated inequality and social problems across EM economies, fueling populism. Key ESG metrics can help show potential pressure points.
Federal Reserve Board of Governors Chair Jay Powell’s term expires in February, and both vice chairs face expiring tenures, too. With another seat already open, how will the Biden administration balance the desire for monetary policy continuity with a wish list that includes tighter bank regulation?
A shift in the inflation landscape is underway. But what will the new regime look like?
As policy priorities change, we believe inflation is on the verge of an important shift higher.
Inflation is back. Though much of the current upward price pressure may fade, there are signs that inflation may be shifting to a new, higher regime.
We still see a big gap between talk and action in the global war on climate change. But a closer look at emissions trends can identify the worst culprits, and perhaps which countries will lead future reductions. This ties directly to climate-change policies and pledges—key factors in our proprietary ESG framework.
A steadily rebounding global economy has created intense supply-demand dislocations, along with new inflation concerns, across advanced markets. We believe inflation will prove transitory, but it could cloud the monetary supply outlook if it’s persistent-with broad implications for financial markets.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next-applying collective insights to help keep our clients at the forefront of change.
Investors have begun to speculate about when the Fed will start tapering its quantitative easing (QE) asset purchases—we think later this year. But officials have learned from their past mistakes and will likely take steps to avoid a repeat of 2013’s “taper tantrum.”
Some market analysts are worried that proposed tax hikes on corporations could dampen business investment and economic growth. Based on the experience of the 2017 corporate tax cut, we think the bigger impact will likely fall on share buybacks—not economic activity.
ESG saw global improvements in 2020, mostly across social indicators. Inequalities and vulnerabilities amplified by the pandemic could continue to negatively affect near-term total ESG scores. But by exposing these deficiencies, the crisis is fostering positive ESG changes in health care systems, environmental sustainability and more.
The global economy is edging near a new, more inflationary regime, as base effects and commodity prices push up headline inflation. But the near-term global growth picture will be driven by the pace of COVID-19 vaccinations and fiscal stimulus.
We expect US core inflation to surge in the months ahead, as comparisons to low price levels of a year ago cause sizable fluctuations. Ultimately, supply should respond to recovering demand, bringing inflation down and enabling continued easy Fed policy.
We expect global growth to accelerate as pandemic restrictions are eased. The US should hit pre-crisis output levels in the second half of 2021, helped by fresh stimulus, while Europe may lag until 2022 and China-already normalizing-prioritizes broader stability.
The probability of more fiscal relief from Congress has risen-good news for the US economy and a boost to our growth forecast. While risks remain, and it's too early to talk about the pandemic in the past tense, we're optimistic the economy can return to more normal footing soon.
The near-term macro outlook looks challenging, especially in the euro area where headwinds from new COVID-19 outbreaks are stronger. But we expect fiscal policy to remain highly supportive, and after a difficult first quarter, global growth is likely to rebound quite strongly.
With vaccine distributions underway, the near-term global economic picture has brightened, but we remain cautious. Questions linger whether any improvement would be durable in the longer-term and if growth will lead to broad-based inflation or higher bond yields.
With a greater level of clarity than we've had since the COVID-19 pandemic, we're getting a better sense of how the US economy might shape up over the next few months, into 2022 and beyond. We see three distinct stages over that time frame.
The US still lags developed countries in ESG progress, based on our research. But with a new Biden administration imminent, scores could begin to improve. And better government handling of the COVID-19 crisis may raise ESG marks as well, which is what we’re seeing in Europe.
Consensus appears to be forming among Chinese policymakers that the US-China relationship will change under a Biden administration. We touch on seven expectations.
Two recent developments could have big implications for the US economic outlook: general elections and news of very promising progress on a COVID-19 vaccine. To understand the ramifications, we have to distinguish near term from longer term.
Despite new COVID-19 cases in Europe, a heated US election cycle and increasingly strained government debt, third-quarter GDP was encouraging. China leads, with output above pre-crisis levels. And vigorous recoveries in the US and euro area place their output at about 4% below pre-crisis levels.
The Fed’s track record of keeping inflation below its own target has complicated efforts to stimulate the economy. Years of emphasizing flexibility in policy decisions leaves its future policy choices subject to interpretation, limiting their impact.
After a strong rebound in the third quarter, the global economy confronts new challenges from COVID-19 resurgences and continued phaseouts of emergency policy support. We'll likely see a modest US expansion, temporary contraction in Europe and a sustained recovery in China, where output is improving.
US third quarter GDP was better than expected, though our updated economic forecasts still show a quick but incomplete recovery. Over time, this should give way to a more gradual, lengthy path back to "normal." But there are a lot of moving parts.
A wave of policy support to stabilize the world economy has left developed nations with a growing public debt load. What path will governments follow to address the issue? History offers several debt-reduction templates.
Our data show a better third quarter for the global economy than the first two of 2020, as economies emerged from the COVID-19 lockdown. There are looming economic threats, including the US presidential election and rising US-China tensions. But potential challenges should be balanced against the promise of sustained government stimulus.
With US elections about two months away, investors are intensifying their focus on the presidential and congressional contests. Historically, political transitions haven't had much impact on the economy and markets, but this time could be different.
How will the impact of the COVID-19 pandemic affect existing long-term trends? In some cases-deglobalization, populism and government debt levels-it will provide more momentum. How will policymakers tackle the debt overhang to keep it from spiraling out of control?
Despite an unprecedented hit to the global economy in the second quarter, rebounds in some countries now seem likely. But investors shouldn't assume a "V-shaped" recovery. Growth prospects will depend mostly on COVID-19's future course, with continued policy easing playing a key supporting role.
US household income has held steady, but only because of stimulus checks and enhanced unemployment benefits. As Congress debates the shape and scope of the next package, economic data show a clear need for more help sooner rather than later.
Our experienced global team of economists offers its latest perspective on the world economy. Included are regional and country forecasts for growth, inflation and interest rates, updates on central bank and fiscal policies, and the upside and downside risks that could change the trajectory.
The Fed gave its updated economic outlook this week, but not the additional policy support markets were looking for. We think this was a misstep...but one we hope will be corrected if the outlook doesn't improve.
Our experienced global team of economists offers its latest perspective on the world economy. Included are regional and country forecasts for growth, inflation and interest rates, updates on central bank and fiscal policies, and the upside and downside risks that could change the trajectory.
The Fed continues to dismiss the idea of negative US rates but the market keeps pricing them in. We don't expect negative rates: in our view, the market is using them as a proxy for Fed measures that may be needed but aren't yet identified.
Our experienced global team of economists offers its latest perspective on the world economy. Included are regional and country forecasts for growth, inflation and interest rates, updates on central bank and fiscal policies, and the upside and downside risks that could change the trajectory.
The onslaught of the coronavirus forced the Federal Reserve and lawmakers to take desperately needed measures. The US economy will eventually recover, but the effects of these drastic policy decisions will be felt for a long time.
The decline in US economic activity from social distancing measures and forced shutdowns is likely to be bigger than our initial guess. While we expect a recovery once the coronavirus crisis eases, we don’t have enough information yet to dimension it.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next—applying collective insights to help keep our clients at the forefront of change.
The historic US fiscal aid package isn't a quick fix, but it provides welcome relief and will make it easier for the US economy to rebound when the coronavirus crisis eases. More important, it shows that Congress is willing to act swiftly and dynamically.
Policymakers cannot avert a big near-term economic hit. But they can build the foundations for recovery—if they take the right steps now.
Conventional wisdom says the Fed is pretty much out of tools to support markets and an economy derailed by the coronavirus. But if things don’t stabilize soon or if the fiscal response is too slow, we expect the Fed to take on broad fiscal-like authority to funnel liquidity into struggling businesses and households.
Europe has changed swiftly from spectator to front-line combatant in the battle against the coronavirus. The potential damage from its spread is severe, but European policymakers are reacting robustly to the threat.
With markets reeling from concerns over the coronavirus and plummeting oil prices, the US Federal Reserve took another step Monday to shore up markets. The Fed has more in its toolbox, but fiscal policy may also be needed to fill a gap in the US economy.
This week’s Fed rate cut helped steady financial markets reeling from the expected impact of the coronavirus on the US economy, and we think more cuts are coming—in March and beyond. The economy should rebound in the second half of the year, though at a lower full-year pace.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next—applying collective insights to help keep our clients at the forefront of change.
Late in 2019, Chile, Colombia and Peru saw an uptick in political turmoil that was unusual, given that they're perceived as politically stable countries with "market-friendly" policies. With several key elections on tap in 2020, we're watching closely for potential risk flare-ups.
The US and China formally signed a phase-one trade deal Wednesday after several months of negotiations. We see the deal as a near-term positive for markets—but it also leaves the thorniest issues between the two countries unresolved.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next—applying collective insights to help keep our clients at the forefront of change.
The US Fed held rates steady in December and plans to continue that stance through 2020. But a lot can happen to change the Fed’s mind—after all, it entered 2019 expecting to hike rates and ended up with three cuts. What does 2020 have in store?
Our experienced global team of economists offers its latest perspective on the world economy. Included are regional and country forecasts for growth, inflation and interest rates, updates on central bank and fiscal policies, and the upside and downside risks that could change the trajectory.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next―applying collective insights to help keep our clients at the forefront of change.
The Fed has signaled it is unlikely to cut interest rates again in December, but we expect further rate cuts next year. We believe the Fed has not yet done enough to protect the economy against headwinds. While we don't forecast a US recession, we think additional monetary policy easing will be needed to stabilize growth.
When driving through Lusaka, Zambia's capital, newly paved roads make it easy to forget that the country's bonds are stressed. I came here in September to find out whether the new finance minister could turn—or at least arrest—the country's dangerous debt trajectory.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next-applying collective insights to help keep our clients at the forefront of change.
As Christine Lagarde prepares to take up her post as the next president of the European Central Bank (ECB), investors are wondering whether the change of leadership will signal a regime shift in monetary policy. Probably not, for two reasons.
The battle for Brexit has undermined traditional political affiliations and triggered changes in the UK's constitutional order that could affect future governability. We may now be approaching the end game, though the outcome might not be the one markets are counting on.
The global economy faces its most challenging year in over a decade. Policymakers still have options, but can they use them effectively?
The global economy faces its most challenging year in over a decade. Policymakers still have options, but can they use them effectively?
With the global economy facing stronger headwinds, we've reduced our global growth and interest-rate expectations. But the US Federal Reserve has a variety of policy tools it could use—some unconventional—that we think will help the US economy hold up better than some of its peers.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next—applying collective insights to help keep our clients at the forefront of change.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what’s next—applying collective insights to help keep our clients at the forefront of change.
Financial markets are focused on the ongoing trade war between the US and China—which goods and services are in play and what measures are being taken or threatened in each case. But the trade conflict could spill over into currency markets—and that's a risk that bears watching.
Global markets have taken heart from a truce in the trade war and signs of yet more monetary-policy stimulus. Easy money may well give a short-term lift to asset prices, but longer-term prospects look more challenging, especially for Europe.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next—applying collective insights to help keep our clients at the forefront of change.
If demographics is destiny, then India may well be the next China in terms of economic growth. Yes, the two countries have significant differences, but they also have some interesting parallels. What's holding India back, and what will help most to unlock its future growth potential?
When I landed in the brand-new airport in Nigeria's capital of Abuja I was taken by the modern and cavernous nature of its terminal, a reflection of the country's future ambitions. One of Africa's best airports, in Accra, Ghana, also boasts a new terminal. Meanwhile, foreign travelers can apply online for an e-visa before they fly to Ivory Coast, pick it up at the airport when they land and emerge into the bustling streets of Abidjan quickly and efficiently.
The Fed left its benchmark rate unchanged this week, but also signaled a very high probability of cuts later this year. Historically, rate cuts have been a sign of trouble—typically made in response to slower growth and rising unemployment. But this time around, growth data aren't showing much weakness. What's the story?
As global growth prospects have weakened, the world of central banking has been turned upside-down. But while the US Federal Reserve (Fed) has already hinted at a change of course, the European Central Bank (ECB) is still struggling to adapt to the new reality.
Will China's economy suffer a hard landing? That's been a concern voiced by investors almost every year for the past 10 years. But now, with China's incredible increase in debt and leverage (not to mention escalating trade wars), the possibility of a hard landing would have critical implications for all global markets.
The trade war has taken a harsher turn, threatening to further dampen economic growth. We expect the Fed to respond with sizable rate cuts, but the timing and amounts are more speculative than normal. Why? Economic data haven't yet taken a major downward turn, and there's uncertainty over how the Fed will react.
The US central bank recently said it would not shrink its balance sheet by as much as many investors had feared. Here's why—and why it matters.
Two important political developments in the UK over the last week have raised new questions about the Brexit outlook. While there's still time for a compromise to be reached, we think the risk of the UK leaving the EU without a deal has increased.
Modern Monetary Theory (MMT) has moved from the fringe to broader public discussion recently, fueling concern from some investors about growing debt levels. We don't expect MMT to replace our current economic structure, but its populist-inspired underpinnings will likely have a sizable influence on policy.
The latest spike in trade tensions between the US and China raises the stakes for the G20 meeting in late June. It also has some investors questioning how China will manage growth as well as fiscal and monetary policy to keep stability through these uncertain times.
The medium-term outlook for global asset prices is dominated by five interconnected secular trends: excessive debt, population ageing, rapid technological change, rising populism and deglobalization. In coming years, these five trends are likely to prompt a once-in-a-generation shift in the global policy regime.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next—applying collective insights to help keep our clients at the forefront of change.
US inflation has been running low for some time, and key members of the Federal Reserve Open Market Committee (FOMC) are pointing a finger at the traditional policy framework. So rate hikes are on hold for the time being—and monetary policy is under the microscope.
Last week's meeting of the Federal Open Market Committee (FOMC) surprised even those who expected a dovish outcome. As the Fed wrangles with its policy framework, one takeaway is clear: don't expect rate hikes this year—and possibly next.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next—applying collective insights to help keep our clients at the forefront of change.
The euro area faces another challenging year, but we see a continuation of recent soft growth as much more likely than recession. The European Central Bank (ECB) is, nonetheless, now likely to delay its first rate hike to 2020, and could also implement fresh credit-easing measures.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what’s next—applying collective insights to help keep our clients at the forefront of change.
Populist, anti-establishment policies will be with us for a while because the conditions that inspire them, such as rising inequality and stagnant incomes, will, too. That has long-term implications for inflation and global growth that investors cannot ignore.
The government shutdown and temporary displacement of some workers didn't cause the strong US labor market to miss a beat. Today's jobs report reinforces that gains have been accelerating. That's good news for the economy and markets.
The magnitude of recent market reactions to the Fed's comments makes it clear that communication between the Fed and markets isn't working: the market is too focused on the Fed-and not enough on the economy. One solution? The Fed should stop giving forward guidance about rates-and eliminate the "dot plot"
Africa's two largest economies will hold elections this year, and there's a good chance the outcomes will lead to slightly faster growth and higher asset prices. But rising populism and nationalism remain a longer-term risk.
As a leading investment management and research firm, AB's unique combination of expertise, insights and global reach allows us to anticipate and advance what's next—applying collective insights to help keep our clients at the forefront of change.
The US government shutdown is almost four weeks old, and there's no sign that the standoff will be resolved anytime soon. How much has the shutdown impacted—and how much will it impact—economic growth? That depends on how long it lasts.
It's been two years since our initial research on populism, and populist-inspired policies continue to advance today on multiple fronts. As we see it, investors should expect more of the same ahead-influencing everything from global economic growth and inflation to policies directed specifically at the corporate sector.
The two biggest economies in Africa—Nigeria and South Africa—both have presidential elections in 2019. The results will set the stage for the next phase of these economies as well as investor interest in them. These elections could also have implications for the economic future throughout the continent.
Updating our two-year-old research on populism, we find that the agenda continues to advance on multiple fronts. Investors should expect more populist policies in the years ahead, which is likely to shift macroeconomic outcomes in a more challenging direction.
As expected, the Fed hiked interest rates yesterday, but we now think there will be fewer hikes in 2019 than we previously called for. Not because the US economy is in trouble, but because the Fed is changing its approach to setting policy.
As we get ready to move into 2019, the macro backdrop points to a less favorable mix of growth and inflation at a time when central bank balance sheets are starting to shrink. Even if growth is simply returning to trend, the year ahead is likely to be more challenging—with populism and China looming as key downside risks.
A rapid rise in US interest rates has put financial markets on the defensive lately. Will the Federal Reserve respond by slowing the pace of its tightening campaign? Don't bet on it.
Rising populism, slower growth and reduced liquidity top the list of downside risks to reckon with in 2019. That adds up to volatility in markets and more challenges for investors.
With cabinet ministers resigning by the hour, it's tempting to think that British Prime Minister Theresa May's Brexit deal with the European Union (EU) is dead on arrival, and that a hard Brexit is now the most likely way forward. But some form of soft Brexit is still the most likely scenario, in our view.
What might the US midterm election results mean for fiscal policy and financial markets? Probably not much if Democrats and Republicans end up splitting control of Congress. But a sweep by either party could lead to very different outcomes.
Aluminum. Cars. Solar panels. It's hard to track the tariffs without a scorecard. As headlines continue to swirl, many investors worry about the impact on the US economy. Clearly, tariffs and trade wars hurt growth, but we don't think the impact will be big enough to derail the economy just yet.
As the global economic cycle moves into a more mature stage, monetary policy is becoming generally less accommodative and inflation risk is up. Meanwhile, geopolitical risk has become a fixture of the global landscape. What does all this mean for our outlook at the midway point of 2018?
While Italy's bond yields have risen, investors have so far reacted relatively calmly to the rising probability of a populist Italian government. Based on the fundamentals, the potential downside scenario looms larger than markets seem willing to consider.
The US Federal Reserve decided against an official short-term rate hike at this week's meeting-hardly a surprise. But US Treasury yields continue to climb in 2018, and not all the explanations are good news.
Steel and aluminum tariffs aren't a big deal for the US economy. But they may be for US trading partners and global growth. Focus on the trade shortfall also obscures a bigger concern: the US fiscal deficit.
There's not much suspense around this week's Fed meeting: the fed funds target rate is almost certain to rise by 25 basis points. We think it's more important not to overlook this cycle's endgame.
Market volatility has spiked recently, driven largely by growing concerns about rising inflation and interest rates. We think the volatility is exaggerated, but we're not surprised inflation is rising-and rates along with it.
The tremors that have battered financial markets recently have been nerve-wracking. But remember, the market is not the economy. Economic growth can persist even when markets decline, and that growth can eventually help to stop the slide.
As 2018 gets rolling, markets don't have great expectations for Fed interest-rate hikes. Based on futures pricing, roughly two small increases are anticipated this year. We think there will be more.
With the US economy humming and the Fed seemingly pushing all the right buttons, it makes sense to expect more of the same in 2018. That means more rate hikes on the way. The question is: How many?
Jerome Powell, President Trump's pick to lead the Federal Reserve, is likely to continue the central bank's gradual retreat from unconventional policy. But the test for a Powell-led Fed will come when the economic cycle turns.