DFEV - Global Macro Outlook: Third Quarter 2024
2024-07-04 10:55:00 ET
Summary
- The global economy moved along as expected, with some slowing but not enough to trigger a recession.
- We view the slowing as positive, contributing to disinflation and bringing economies back into balance.
- Rate cuts have begun in key markets, with US easing now expected to begin in December, and coming elections could weigh on markets, but the global economy remains in relatively good shape.
- Growth stabilized in China, easing market concerns, but further improvement from here will rely on effective policy.
- We continue to expect a soft landing, as price pressures ease in more regions.
The Macro Picture
The global economy proceeded largely along the lines we expected in the second quarter. While there is increasing evidence that growth is slowing, any slowdown still appears manageable and unlikely to result in a recession in the near term. Indeed, we view the slowing more as good news than bad: it's contributing to ongoing disinflation, which will bring the economy back into balance and allow central banks to cut interest rates significantly.
In fact, rate cuts started in emerging markets several months ago and the first developed-market central banks joined in last quarter, beginning with the European Central Bank (ECB), Swiss National Bank (SNB) and the Bank of Canada ((BOC)). We expect that the Federal Open Market Committee (FOMC) will follow suit, albeit not until later this year. The combination of decent, if unspectacular, economic growth and the prospect of lower interest rates to come is a constructive one for investors, reflected in the strong performance of many financial assets through June....
Global Macro Outlook: Third Quarter 2024