Weekly Economic Insights - 4 February 2019

Macro Highlights - 2/6/2019

Highlights of the week

Economist insights: The Fed has confirmed its pause, dynamic US employment report, rebound of China’s official composite PMI and drop in leading indicators in Switzerland

US Federal Reserve

  • The Fed continues to anticipate strong GDP growth in the US in 2019, but indicates it has paused its process of raising its key rate…
  • … due notably to the slowdown in world growth, which is sharper than it had anticipated
  • This cautious stance adopted by the Fed has led us to now expect that the fed funds rate should be maintained at 2.50% over the coming months
  • The Fed should nevertheless resume its rate hikes at the end of H1 if the Chinese stimulus plan is effective and contributes to limiting the slowdown in world growth according to our scenario

United States

  • Confidence indices have deteriorated slightly, but economic data, notably the employment report, remained dynamic in January
  • The shift in the rhetoric used by the Democrats and Donald Trump opens the door to an agreement on the issue of the Mexican border, which is at the heart of the negotiations over the shutdown…
  • … which could limit its impact to 0.17 percentage point on annualized quarterly GDP growth in Q1 according to our estimates


  • The official composite PMI rebounded in January after three successive drops, indicating that the Chinese stimulus plan may begin to produce its first effects…
  • .... underpinning our scenario of a slight acceleration in GDP growth in H1 2019
  • Moreover, while the Caixin manufacturing PMI decreased in January, the services index has fallen only slightly and remains above its 2018 average


  • The decline in leading indicators backs our scenario of a deceleration in activity in 2019


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