Author's Contributions
High uncertainty reduces potential for asset price increases
The environment for the financial markets remains highly uncertain. The further development of inflation and economic growth is not sufficiently foreseeable. This points to continued high fluctuations in asset prices.
Ceteris Paribus
The indications that the inflation peak will be exceeded are growing. If the relationship between inflation surprises (upside) and asset prices (downside) were to hold, that would be, all other things being equal, good news for the financial market.
Transition Phase
So far this year, high inflation rates have been the driving factor on the financial markets. This could now change, as Chief Economist Gerhard Winzer writes. Disappointingly weak indicators of economic activity could now increasingly come into focus.
One month is not yet a trend
The rise in inflation in the USA was recently lower than expected, which led to a significantly brighter mood on the markets. However, a favourable inflation report is not yet a trend, as Chief Economist Gerhard Winzer emphasises.
Reduction in the pace of key interest rate increases
More and more central banks are signalling a reduction in the pace at which they are raising key interest rates. However, as Chief Economist Gerhard Winzer explains, this does not necessarily mean that central banks are softening their focus on fighting inflation. Rather, a pause in the rate hike cycle would require a change in inflation dynamics.
Strong US dollar increases pressure on Japan’s central bank
The soaring US dollar is causing problems in countries outside the USA. In Japan, the Yen has weakened considerably recently because, unlike the other central banks, the Bank of Japan is sticking to its ultra-loose monetary policy. Against this backdrop, the meeting of the Japanese central bank next Friday will be more in focus than usual.
Inflation rates (still) too high
The inflation problem continues to preoccupy the central banks. They are likely to maintain their basic restrictive stance until inflation rates have convincingly embarked on a downward trend.
Fed remains on course
The latest US labor market data suggest that the Fed will remain on its course of more restrictive monetary policy. “As long as job growth remains strong and unemployment and participation rates remain low, the Fed will maintain its basic restrictive stance”, writes Head Economist Gerhard Winzer in his market commentary.
Excessive Pessimism?
The unexpectedly high inflation rates draw even wider circles. In view of the pessimistic mood, the question arises whether the negative environment is already being reflected by market prices.
Rapid and synchronous key rate hikes
Central banks are responding to high inflation by raising key interest rates. Further key rate hikes are likely this week as well.
Monetary tightening even as growth slows further?
Last week, three major central banks have raised their key interest rates further. By nature, however, it is not easy to find the right key interest rate level – especially in the current environment.
For some time valid: Elevated recession risks and restrictive monetary policy
The central banks want to achieve their long-term inflation target of 2%. In order to achieve this goal, they have raised key interest rates and are implementing a restrictive monetary policy. The higher key interest rates will weaken economic growth and also the labour market. Whether this can be achieved without a recession or whether there will be a “soft landing” is currently the subject of heated debate.
Jackson Hole – Focus on Monetary Policy
This week, the highly acclaimed Jackson Hole Economic Symposium will take place. Fed Chairman Jerome Powell’s speech will be the center of attention.
Very tight labor market in the USA
Many economic indicators point to weakening economic momentum. Meanwhile, the US labor market continues to be very robust, which recently mitigated the immediate risks of recession in the United States.
The Euro – a Snapshot
For more than 20 years, the euro has been the instrument of payment for around 340 million people. What is the current state of our currency and what opportunities and challenges does the euro face?
Recession Risks
Ahead of the upcoming interest rate decision by the Federal Reserve, a number of economic indicators point to increasing risks of growth or recession. There are also uncertainties regarding the further development of inflation and the effectiveness of monetary policy measures.
Mega interest rate hikes indirectly increase purchasing power
Gerhard Winzer, Chief Economist at Erste Asset Management, provides an overview of recent economic developments and explains, among other things, what structural problems the euro is facing.
Central Banks Attempt to Prevent Inflationary Spiral
Since the beginning of the year, the bond markets have been in a bear market. What are the implications for the economy? Erste Asset Management Chief Economist Gerhard Winzer analyzes three models in relation to the development of inflation and their implications.
Increasing growth risks
Inflation, the war in Ukraine and monetary policy are driving the markets and stoking fears of an impending recession. Initial economic indicators also point to gloomy growth prospects.
Way Out Recession?
The prices of risk asset classes are subject to downward pressure. Is an inflation spiral likely to occur? Will the increase in key interest rates trigger a recession?
High inflation rates increase downside risks
Inflation rates continue to rise, prompting central banks to accelerate rate hikes. Which models for the future inflation development are conceivable? Erste Asset Management Chief Economist Winzer analyzes which scenarios are imaginable in the future.
Growth fears
Inflation has been the underlying factor in economy for some time. A recovery of GDP on a pre-pandemic level should be reached soon. The probability of a growth phase has increased. What further developments are expected?
Hawkish and bearish
Expectations of key interest rate hikes have been the most important driving factor for the capital markets since the beginning of the year. The Federal Reserve Chairman reiterated the Fed’s hawkish and bearish stance. How will the financial environment change in the second half of the year?
Tightening of financial condition
The global economy has been confronted with two stagflationary events in the last two years: the Covid-19 pandemic and the war in Ukraine. What factors are influencing the uncertainty in the markets? Erste Asset Management Chief Economist Winzer analyzes which scenarios are conceivable in the future.
The End of Loose Monetary Policy
The US Federal Reserve is turning the interest rate screw hard and accelerating the exit from its ultra-expansive monetary policy. Will it get a grip on high inflation? And how will the economy cope with higher interest rates?
The hour of the hawks
In the US, interest rate hikes to a level of 3% by the end of 2023 have become likely. When will the European Central Bank follow? Erste Asset Management Chief Economist Gerhard Winzer analyses the interest rate policies of the central banks.
The invasion of Ukraine by Russia and its massive effects
Within two years, the global economy has been confronted by two negative events or, indeed, shocks: the Covid pandemic was the first one, having not only killed six million people globally at this point, but having also caused an unprecedented slump in the global economy and the subsequent recovery. The second one, i.e. the invasion of Ukraine by Russia, is of a geopolitical nature and has triggered a commodity price shock.
Two stagflationary shocks: pandemic and war in Ukraine
The global economy was confronted with two negative developments within two years: the Covid-19 pandemic and the Ukraine war. Erste Asset Management’s Chief Economist Winzer analyzes the stagflationary state of the economy.
The impact of the war in Ukraine
We want to highlight the possible impact of the war in Ukraine on investment decisions. In short, the conflict reinforces already existing trends. In addition, the global recovery scenario is still holding, but recession risks in Europe have increased.
Interest rate policy quo vadis? 3 monetary policy scenarios
Rising inflation and rising bond yields have recently caused uncertainty among investors. Will key interest rates in the USA be raised soon? Erste Asset Management’s Chief Economist Winzer outlines 3 scenarios for the interest rate policy of the central banks.
The crisis in Ukraine
The risk of an escalation of the geopolitical conflict between Russia, Ukraine and NATO has risen further in recent days.
10 theses for 2022
Waves of infections will continue to influence economic activity and the markets. What will happen in China, what are the inflation risks and will it be volatile? Our chief economist Gerhard Winzer has drawn up 10 theses for the year 2022.
Pandemic year three: what are the challenges ahead?
We are now into the third year of the pandemic. Since the spring 2020 collapse, economic activity and markets have shown exceptional resilience. This is not to be taken for granted. After all, the list of potential negative influences (“challenges”) is long.
Inflation at its peak – what are the reasons?
At 5.2% y/y, consumer price inflation for the OECD region reached the highest value in October since 1997. Has inflation peaked, or are we at the outset of a sustained period of high inflation?
Falling Momentum and Hawkish central banks
Falling economic indicators, anger in China and interest rate decisions by central banks are currently in the focus of the financial markets. Our chief economist Gerhard Winzer analyses the current situation.
Global economy running into headwind
The global economy is in the recovery phase of the cycle. Economic growth is well above the long-term trend, but headwinds have increased recently. What needs to happen to ensure that growth does not slow down? Chief Economist Gerhard Winzer analyses the prospects for the future.
Falling economic momentum is not bad news
One of the most important economic indicators, the global purchasing managers index for the manufacturing sector, fell in June compared to the previous month. Is that bad news for risky asset classes like stocks? Our chief economist Gerhard Winzer analyzes the most important scenarios.
The Fed is a dove
Equities have been weaker in recent days. This is largely due to concerns that sooner-than-expected interest rate increases in the USA could be detrimental to the financial market. Chief economist Gerhard Winzer explains why in the most likely case scenario, this will not be happening in the foreseeable future.
Rapid recovery in the developed world
The global economy is caught between a strong recovery and inflation fears. Despite low risk premiums, Erste AM Chief Economist Gerhard Winzer continues to see opportunities for equities as long as bond yields rise less than corporate earnings growth rates. Read more in his blog analysis.
Yield curve management
In recent days, equities and other risky asset classes have come under pressure despite the fact that in the year to date the optimism about an economic recovery has been on the rise. Is that a case of “buy the rumour, sell the fact”? Had the good news already been priced into the market? Or is there another mechanism that could be driving the future development?
Tensions are rising in the run-up to the US elections
The US elections in November are not only important from a geopolitical perspective. The race between Joe Biden and Donald Trump for the presidency also influences events on the financial markets.
Labour day: High unemployment challenges economic policy-makers
It is now that we are becoming acutely aware of how important work is for us, with the job market data taking to centre stage on this year’s Labour Day. The number of people who are out of a job because of the pandemic has increased drastically. Numerous measures, such as reduced working hours in Austria, have been taken in an effort to contain the situation. We expect a positive trend reversal later in the year.
The long-term consequences of the corona pandemic – an analysis
The corona pandemic has plunged the world into an economic crisis. Erste AM chief economist Gerhard Winzer analyzes the 10 most important points about recovery, economic policy, inflation and the duration of the slump.
Coronacession
The world is in a state of emergency, with the corona pandemic constituting a global health, economic, and financial crisis. The term “Coronacession” has been created as a chimaera of corona and recession. The central question is how deep the emergency runs and how long it will last. The speed of the development is breath-taking. […]
Distortions on the financial market
The distortions on the financial market continue, and the prices of risky asset classes such as equities and corporate bonds with low credit quality are falling. Market prices have increasingly come to reflect a global recession.
Coronavirus: epidemic in China disrupts recovery scenario
Coronavirus: The economy is increasingly affected by the virus crisis. Will China’s economy be able to withstand the pressure despite resistance? Analysis by Erste AM chief economist Gerhard Winzer.
A recovering global economy?
The recovery of the world economy has become more likely: First AM chief economist Gerhard Winzer gives an outlook on whether the trend reversal is done.
Weak growth and risks
The recent confrontation between the USA and China in the areas of trade and currency management triggered temporary losses for risky asset classes such as equities. Are the negative implications of an ongoing USA-China conflict strong enough to set off a decline or even a recession?
Outlook for the second half of 2019
Many asset classes recorded significant gains. At the same time, the falling tendency of numerous economic indicators has suggested a slowdown in GDP growth. How do these two go together?
Transformation process in China
China accounts for just under 16% of world gross domestic product, making it the second largest economy in the world. Can this success story be continued – what speaks for and what against it?