The United States: Inflation will moderate next year as the massive oil price adjustment makes its way through the economy.
China: Slower credit expansion does not bode well for China’s economic activity next year.
The Eurozone: The market’s expectations for the timing of the ECB’s liftoff are getting pushed further out.
Credit: Below we have some stats on the US asset-backed commercial paper market (ABCP) which was at the epicenter of the financial crisis. In 2007, as mortgage defaults climbed, money market investors refused to roll these short-term debt obligations. Banks, who backstopped many of these ABCP programs, were forced to take the underlying securities (often tranches of securitized products) onto their balance sheets, boosting their direct exposure to sub-prime mortgage debt. The ABCP market is now dramatically different and much smaller.
Emerging Markets: The Philippine trade deficit will be a drag on the peso.
Global Developments: How many central banks are hiking rates vs. easing? The chart below includes a forecast for next year (CE = Capital Economics).
Food for Thought: Patent wars:
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