The Macro Report | January 2019

A delicate balance

A delicate balance

Forecasting 2019 means interpreting the interactions between economic growth, interest rates, and risky assets. Global growth is slowing. In the United States, waning fiscal stimulus measures and higher rates will trigger the pace of expansion to moderate this year. While we do not forecast a recession, markets remain on edge and investors are betting a slowdown will prevent the Federal Reserve from raising interest rates. A growing chorus of Fed officials have in recent weeks indicated the central bank will need to assess the economy before considering additional monetary tightening.

Meanwhile, China’s economy — the world’s second largest and an anchor for other emerging markets — continues to face headwinds. The central bank has taken steps to cushion the slowdown. President Donald Trump and Chinese President Xi Jinping agreed to hold off on further tariffs until March 1, 2019, to allow time to negotiate a trade agreement. Elsewhere, emerging markets remain vulnerable to rising interest rates and cooling growth.


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Forecasting 2019 means interpreting the interactions between economic growth, interest rates, and risky assets.