WHAT THE CURRENT ACCOUNT CAN TELL YOU 5% UK current account balance - - PowerPoint PPT Presentation

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Jul 19, 2023 229 likes •280 views

WHAT THE CURRENT ACCOUNT CAN TELL YOU 5% UK current account balance 4% Low Point Q4 1988 - Low Point Q2 1974 - 5.1% 3% 4.3% CA deficit. UK locks IMF bailout 1976 2% into ERM, forced Low Point Q4 2015 - % of GDP out in 1992. 6.0%

SLIDE 1

B O N D V I G I L A N T E S

Source: Bloomberg 8 Nov. 2018

WHAT THE CURRENT ACCOUNT CAN TELL YOU

0% 1% 2% 3% 4% 5% % of GDP

Low Point Q4 1967 -2.6% peg devalued by 14.3% in 1967 Low Point Q2 1974 - 4.3% IMF bailout 1976 Low Point Q4 1988 - 5.1% CA deficit. UK locks £ into ERM, forced

ut in 1992.

Q4 2006 -3.3% Sustained CA deficits, sign of credit bubble. GFC hits, £ sinks Low Point Q4 2015 - 6.0% Large CA deficit, Brexit fears push £ down

UK current account balance

SLIDE 2

Source: Bloomberg 15 Nov. 2018

Sterling: reflection or manipulation?

1 1.2 1.4 1.6 1.8 2 2.2 2.4 2.6

USD x GBP

B O N D V I G I L A N T E S

SLIDE 3

Source: Haver, RBC Capital Markets US Economics, November 2018

US Inflation: another story

B O N D V I G I L A N T E S

SLIDE 4

B O N D V I G I L A N T E S

Source: Bloomberg as of 15 Nov. 2018.

The week ahead Monday 19: UK house prices, ECB Current Account Tuesday 20: US housing starts Wednesday 21: Japan inflation, US existing home sales, U. Michigan sentiment Thursday 22: EU consumer confidence