After signing up, you will receive regular newsletters from Corpay, and may unsubscribe at any time. View Corpay’s Privacy Policy
A more bearish backdrop for the yen might unfold if the Bank of Japan holds firm, ignoring elevated inflation and indications that price growth could persist. In this scenario, wide interest rate differentials should continue to depress the yen: especially if risk sentiment remains buoyant, inflation cools, and global growth slows whilst avoiding more sinister outcomes. USDJPY and Japan Trade-Weighted Index
A more bearish backdrop for the yen might unfold if the Bank of Japan holds firm, ignoring elevated inflation and indications that price growth could persist. In this scenario, wide interest rate differentials should continue to depress the yen: especially if risk sentiment remains buoyant, inflation cools, and global growth slows whilst avoiding more sinister outcomes. USDJPY and Japan Trade Weighted Index
A bearish scenario for the renminbi could manifest if China’s economy fails to re-ignite. There is a risk that the government’s policy response is not forceful enough to sustainably turn the property market around, awaken dormant animal spirits, and counteract the drag on exports and production within a sluggish global export environment. An extended period of subpar growth might unnerve markets, given the potential financial stability and deflationary risks that could be enflamed. We think this sort of backdrop could accelerate renminbi-negative capital flight out of the country. China inflation, annual % change
A more bearish scenario could play out if China’s economic troubles endure and stimulus supports fail to take hold. A soft growth pulse would be a negative for commodities and risk sentiment and could weigh on growth-linked currencies. Domestically, the jump in mortgage rates could also raise financial stability concerns given elevated household debt burdens and the banking sector’s property market exposures. A spike in unemployment generated by a sharp economic slowdown could also trigger adverse non-linear outcomes. Real gross domestic product, annual % change
The global adjustment to higher borrowing costs is just beginning, and we think it will likely be more painful for some than others. Across developed economies, households and businesses are struggling under a mountain of debt that will, in many cases, only get heavier and more destabilizing in the year ahead. Private non-financial sector debt service ratios, % Exposures vary across countries, and structural differences complicate cross-national comparisons. But we think the United Kingdom bore the brunt of tightening early and could move through the low point of the economic cycle relatively quickly, given a lower starting point in private...