G20 fails to provide solutions but may induce Fed not to act


01 Jul

G20 fails to provide solutions but may induce Fed not to act

Power struggle to carry on beyond G20 meeting. Expectations of key rates’ cuts too high. Consumption to drive GDP. Reduce equity exposure once again.

Key points

  • G20 fails to provide solutions but truce could induce Fed to hold off
  • Central bank faced with a difficult choice
  • Lowering rates will consolidate recession scenario
  • Waiting until September will cause disappointment
  • What possible reactions should rates fail to be lowered on 31 July?
  • What is the most likely scenario?
  • Leading indicators on the threshold of growth
  • GDP growth estimated at +2% in Q2
  • Consumption will likely be key driver
  • Full employment, inflation and interest rates
  • Market movements in June herald the return of volatility
  • Reduce exposure to US equities