Global Economy second and third quarter in 2019

The global economic growth is slowing down but still around 2.6%-2.9%. In the US the markets focus around 2.5% growth.

Trade is shrinking due to the conflict between the US and China which means a negative impact on industry and manufacturing respectively. However, in Europe and US domestic demand remains neutral to positive levels and job creation still on track.

After the market rally in the first quarter, we saw through the second quarter negative direction in stock markets (global). In addition, Central Banks will remain accommodative for longer initially expected after the slowdown in global economy. Markets are expecting the FED cut interest rate in 2019 and 2020 respectively. Also, In Europe, markets expecting that the ECB will announce more measures to stimulate the economy at the next meeting on September 12, expecting to cut the rates and set up a new round of bond purchases (QE). The base scenario for the September meeting is a 10bp rate cut, 30bn of QE per month for nine months.

The inflations expect will be set up to lower this year. In China, Central Bank policy remains accommodative too and markets expected the growth there stay around at 6%.

Bonds yield have declined more than expected through the second quarter due to economic growth, Central bank’s policy, Lower inflation and of course global Political issues (China-US-HK).

Finally, Markets for longer- term still to a positive side after the consolidation the second and third quarter.

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Christos Nikolaou

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