Share Appians news

  • Thematically, over the next few weeks we expect the macro focus to center on developments in the US China Trade talks. The Trump administration increased the tariff rate on $200bn of Chinese goods to 25% (from 10%). Goods at sea will not be tariffed at this rate hence there is a window of a few weeks for negotiations to come to a successful conclusion, although Chinese retaliation can be expected. A China trade war/agreement is going to be politically complicated for Trump, no matter what the eventual outcome might be.
  • The EU released their updated economic forecasts for its member countries. On an aggregated basis there was a slight downgrade of GDP for ’19 and ’20 at 1.2% and 1.5% respectively. More notable from an individual country perspective was the 2019 GDP forecasts for Germany (0.5%) and Italy (0.1%). The EU highlighted the impact of a slowing global economy, trade disputes, social unrest and Brexit on their forecasts.
  • Ireland being an open economy will naturally be impacted by the global slowdown yet the EU forecasts Ireland continuing to have one of the highest GDP growth levels in the EU for 2019 (3.8%). This expected growth coupled with the “search for yield” allowed the NTMA to raise €4bn via a 2050 Irish Sovereign Bond at a yield to maturity of 1.53%. The order book totaled €18bn and was 4.6x covered. Unfortunately, Debt/GNI of 105% (as of the end of 2018) limits the government’s ability to raise cheap debt for appropriate infrastructure expenditure – regrettably in light of the Department of Finances critique of the government’s rural broadband plan.
  • There was a spike in Irish inflation (see chart) with the main contributors being Housing, Water, Electricity, Transport and Restaurants. The timing of Easter may be an influential reason for this spike but if sustained it may impact future public and private sector wage negotiations.