GLOBAL ECONOMIC RESEARCH

The latest escalation in the US-China trade war has reverberated through financial markets. The policy response will be important – we now expect two further 25bp cuts in the fed funds rate this year. China is also likely to use policy measures to offset any tariff impact, including allowing further depreciation of its currency.

The latest escalation in the US-China trade war – with the US imposing a 10% tariff on most remaining China imports – has reverberated through financial markets.

US dollar NAB’s Non-Rural Commodity Price Index is forecasted to increase by 2.1% yoy in Q3 2019, however underlying trends remain highly mixed. Higher export prices for LNG and iron ore (despite more recent spot price falls) are the key contributors, while both thermal and metallurgical coal are weaker, as are most base metals.

US economic growth slowed in Q2 2019 – will this trend continue? One implication is that the Fed will cut rates.

Indicators in major advanced economies point to a renewed easing in growth for the rest of 2019, driven largely by the US economy. Similarly in Australia, we expect growth to continue at a below trend pace over the next few years.

Global growth remains under pressure even with US-China trade dispute pause.

NAB’s Non-Rural Commodity Price Index has been on the up in recent quarters, in large part due to iron ore prices.

Horticulture exports grow to rival Australian lamb and dairy.

The Fed is close to cutting rates.