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Articles by Tim Drayson
When will central banks cease tightening?
By Tim Drayson , James Carrick, Legal and General Investment Management Markets suggest the US has almost reached an inflection point, while the UK and Europe have further to go in their battles against inflation. Prospects for the global economy are mixed, at best, this year: While the US should follow the UK and Europe into recession, we expect China to bounce back after scrapping its zero-COVID policy. Over the past few years, the global economy overheated.
Japan versus global inflation
13 Jul 2022 3 min read Numerous factors are putting upward pressure on prices in Japan, and the yen is acting as an escape valve for the central bank's yield curve control policy. Japan stands out as one of the few economies that appears impervious to the wave of inflation washing over the world economy.
Pervasive gloom: just how bad is the US outlook?
Markets have embraced a stagflationary outlook so far this year. Inflation has surprised to the upside, central banks have continued their hawkish pivots and the chatter around recession risks has grown louder. Our views on US recession risks have only marginally shifted up from early April partly because we expected terminal rates to re-price higher and for inflation to prove more persistent. Kicking the tyres of the US economy So, what happens next?
What three worries?
Our biggest fears about the current economic outlook. With our recent concerns about China somewhat allayed, the case for a medium-term positive stance is reinforced: a global economy in mid-cycle, excess savings, neutral investor positioning and committed support from central banks. That said, we still believe that there are three significant risks on the horizon: 1.
Standing up economic, market data via alternative sources
Unconventional datasets can help us challenge conventional thinking about economic and market trends. The rise of what was known as the ‘alternative comedy’ scene in the 1980s prompted a common retort among its critics. “More like alternative to comedy,” they would sneer. Three decades later, so-called ‘alternative data’ are becoming more prominent on the investment scene. Perhaps you have heard of hedge funds buying satellite photos of car parks for more insight into retail trends.
NAFTA: Would withdrawing benefit the US?
NAFTA: Would withdrawing benefit the US? Around one third of US trade is with Canada and Mexico. Manufacturing unions blame NAFTA for sending US manufacturing jobs abroad and President Trump campaigned on a platform to reverse the offshoring of recent years. The question is whether withdrawing from NAFTA would be of economic benefit to the US? There is no doubt that NAFTA is in need of reform. It was originally set up in 1994 before the digital and e-commerce era.
LGIM: Could Trump delivering on campaign promises derail US economy? - Fund Strategy
At the start of the year markets were expecting Congress to make progress on a package of growth-boosting measures around tax reform and infrastructure spending. At the same time, there were concerns about increasing US protectionism with the pledge to abandon the Trans Pacific Partnership trade deal and desire to renegotiate NAFTA both seen as a shift towards a more protectionist US. This policy mix led market-based measures of inflation expectations to rise following the election.
LGIM - Asset allocation team
LGIM has over 35 years of experience in multi-asset investments. Our dedicated Asset Allocation team combines strategic economic views with insights into a diversified range of global asset classes, strong portfolio management capabilities and sophisticated risk management.
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