From global markets to questions of development, money and economic activity.
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Commodity currency returns reflect both export prices and domestic or global risk. Jonathan Fortun and Sergi Lanau find that commodity prices matter most where trade is less diversified, but that their influence changes substantially over time. The November 2019 analysis also emphasizes shifting sensitivity to other risks, cautioning against treating these currencies as a fixed proxy for commodity prices.
Read the workPersistently weak inflation challenged estimates that the euro area periphery was close to full employment in 2019. Jonathan Fortun, Robin Brooks and Sergi Lanau explained a Phillips curve method that lowers the estimated unemployment rate consistent with stable inflation when observed inflation is subdued. Their calculations implied substantially more unused labor capacity than the consensus, while remaining consistent with US Congressional Budget Office estimates for the United States.
Read the workEmerging markets received $22.5 billion in portfolio inflows in October 2019, overwhelmingly through debt securities. Benjamin Hilgenstock and Jonathan Fortun separate $21.3 billion of debt inflows from $1.2 billion in equities. They also report September outflows of $31.4 billion on the broader net capital flow measure, distinguishing the two periods and concepts.
Read the workGermany’s industrial weakness complicated efforts to lift euro area inflation in October 2019. Jonathan Fortun and Robin Brooks trace pressures from the automotive sector, environmental standards and weak exports to the United Kingdom and Turkey. They argue that this downturn compounded deflation risks already associated with unused economic capacity in the euro area periphery.
Read the workResilient services offered support for global activity despite weak manufacturing in October 2019. Jonathan Fortun and Sergi Lanau emphasize the large contribution of services to growth while identifying economies more exposed to industrial swings. Germany, Japan, China, Indonesia and Korea stood out as vulnerable to the manufacturing cycle.
Read the workRecession fears, trade tensions and weak emerging market currencies framed the macroeconomic questions for the IIF’s October 2019 Annual Meetings. Jonathan Fortun and Robin Brooks argued that fears of a US and global recession were overstated and that limited supply chain damage left scope for a rebound after a trade truce. They also examined why a positioning overhang was preventing emerging market currencies from benefiting as usual from a more accommodative Federal Reserve.
Read the workWhich Asian economies could absorb production shifting away from China under US tariffs? Gene Ma, Jonathan Fortun and Reza Siregar compare production structures using input and output tables in October 2019. Many economies specialized in commodities and simpler consumer goods, while Korea and Taiwan stood out for their presence in sophisticated manufacturing.
Read the workSlower US job creation in October 2019 did not necessarily signal an approaching recession. Jonathan Fortun and Robin Brooks placed the deceleration within a longer trend of tightening labor conditions. Their interpretation was that a maturing labor market could generate fewer additional jobs without implying a deterioration in the broader economic cycle.
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