Macro Highlights August 10th 2015

Economic outlook - 8/10/2015

Our Investment Research Department publishes a weekly newsletter with a round-up on the main economic developments and news flow.

Surprisingly America’s ISM non-manufacturing index rose to a 10-year high in July.

The US Institute for Supply Management (ISM) surprised investors with a reading of 60.3 points for its non-manufacturing index in July, the highest level in ten years. This points to persistently steady activity in the services sector (accounting for 78% of America’s overall GDP), thanks to a robust labour market, cheap energy and low borrowing costs. The increase in the "new orders" component should mark a return to rising inflation. This good showing in the non-manufacturing segment thus easily counterbalances last month’s slight downturn in manufacturing. (...)

With slumping growth, high inflation and a depreciating currency, Brazil continues to hold little appeal for investors.

In an article in Macro Highlights & Strategy earlier this year we discussed the period of economic adjustment that Brazil is going through and that is necessary for sustainable growth to resume. On top of economic sluggishness, high inflation, government deficits and public outrage over political scandals, the rating of Brazil’s sovereign bonds has now been put on watch by Standard & Poor’s. The country’s international debt rating stands just one notch above junk status. (...)