Economic Reports.

The risk of President Trump’s impeachment increased in September with Democrats instigating the first stages of the process.

The upside-down world of interest rates became even more contorted in August. Approximately a third of all government and corporate debt now carries a negative yield.

Markets have been fuelled by a decade of bailouts and dovish monetary policy. It’s hard to ignore the importance of this fact and how it has characterised the current economic expansion.

Uncertainty about trade and populist policies continues to weigh on market sentiment and business confidence. Some economic indicators are weakening in 2019 from the relatively positive position in 2018.

The abrupt increase in US tariffs on imports from China threatens the nascent recovery in global industrial production that appeared to be underway. Tariffs and tariff fears have a large impact on high frequency data such as trade, industrial production, business investment, PMIs, and many highly correlated financial asset prices. Roughly half of China’s exports to the United States face 25% tariffs.

We are cautiously positive on equities because economies around the world are still expanding at decent rates and there are no apparent inflation trends.

Interest rates driven lower on concerns of slower global growth

It was a gloomy finish to 2018 for the global economy. Markets plunged and America’s government was locked in a seemingly endless shutdown, but developments have not played out as dismally as feared.

Politics continues to play a major role in the risks to the global economic outlook, with the threat of ongoing and potentially escalating trade tensions and a hard Brexit outcome still lingering.

For New Zealand, our economy has been supported by the tailwinds of record-high Terms of Trade, low interest rates and strong population growth. Nonetheless, business confidence remains weak and points to an upcoming slowdown in growth led by a fall in business investment.