China’s 19th Communist Party Congress is fast approaching. While the meetings are primarily a political event, they will shed some light on the party’s broad economic goals. There will also be major reshuffling across party leadership this year. Read below for our synopsis and predictions:
With limited evidence of excess in the global financial system and mostly low interest rates around the world, I am optimistic about global economic prospects. Here’s a snapshot of the major themes I’m watching:
Has China’s renminbi unseated the Japanese yen as the new “safe haven” currency in Asia? Some market commentators have adopted this view given the renminbi’s recent strength, intensifying geopolitical tensions in Asia and Japan’s proximity to North Korea.
Current estimates show a significant gap between the rate expectations of Wall Street economists and the Fed funds futures markets. The spread between their estimates for December 2019 is nearly 100 basis points, the equivalent of roughly four rate hikes. Over time, this gap in expectations is going to close one way or the other.
The Federal Reserve’s balance sheet has been grabbing headlines recently, and with good reason: the Fed’s three massive bond buying programs, used to stimulate the US economy during and after the 2008 financial crisis, have left the central bank holding trillions of dollars worth of Treasury and agency mortgage-backed securities (MBS).