Edmond de Rothschild – Macro Highlights – Commodities, US Inflation & Monetary Policies

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Economists' insight: The Fed steals Donald Trump’s thunder

Economist Insights: Oil needs to be monitored, US inflation disappoints (p.1)

›       Since the start of 2017, commodity prices have contracted, reflecting the impact of the drop in energy prices and particularly crude oil

›       A marked contraction in oil prices would likely reduce corporate investment by oil firms in the US and bring an end to the accommodative monetary cycle in Russia and Brazil

›       In the US, while the drop in commodity prices is one of the reasons why inflation cooled to 1.9% in May, the downturn in healthcare prices and rents was also a factor

Monetary policy focus: New era for monetary policies? (p.4)

›       The Fed has just announced that it intends to start reducing the size of its balance later this year, which represents the third and final stage in the exit from its accommodative monetary policy

›       Our analysis shows that the strategies applied by other central banks are not necessarily expected to be identical to the Fed’s position, in terms of their timing or sequences

›       As a result, changes in yield curves could vary quite significantly between the major regions over the coming quarters

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