V i e w p o i n t | 13 Aug 2025 03:00:00 ET │ 30 pages Global Economics Global Indicators July Chartbook: The World in Pictures CITI'S TAKE Our global indicators chartbook highlights continued resilience in services sectors as high tariffs create challenges for global manufacturing. The global services PMI increased appreciably in July and now stands above its average over the last few years. In contrast, manufacturing has struggled in recent months, with nearly 80% of country-level readings in contractiona ...

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses global economic trends, focusing on central bank rates, inflation, and key economic indicators across various countries. Core Insights and Arguments 1. **Central Bank Rate Projections**: - The Federal Reserve's current funds rate is between 4.25% and 4.50%, with expected easing moves in June 2025 to 4.00%-4.25% [2] - The European Central Bank (ECB) is projected to reduce its main refinancing rate from 4.50% in April 2025 to 1.40% by Q1 2026 [2] - The Bank of England (BoE) is expected to lower its bank rate from 4.50% in February 2025 to 3.50% by Q1 2026 [2] 2. **Inflation Projections**: - The U.S. Consumer Price Index (CPI) is projected to be 2.9% year-on-year in July 2024, decreasing to 2.2% by April 2025 [3] - The UK Retail Price Index (RPI) is expected to be 3.6% in July 2024, with a slight decrease to 3.2% by April 2025 [3] - Euro area inflation is projected to stabilize around 2.0% by April 2025 [3] 3. **Global Economic Indicators**: - The U.S. GDP is projected to grow at a rate of 3.0% in Q1 2025, with consumer spending expected to increase by 2.8% [5] - Japan's retail sales are expected to grow by 3.6% year-on-year in March 2025 [5] - Brazil's current account balance is projected to be -$9.6 billion in March 2025 [4] 4. **Key Economic Events**: - Upcoming economic data releases include GDP figures from Spain and Italy, as well as consumer confidence indices from various countries [4] - The ECB is scheduled to hold a conference discussing global trade and capital flows, which may impact market sentiment [4] Other Important but Potentially Overlooked Content 1. **Emerging Markets**: - China's 7-day OMO rate is currently at 1.50%, with expectations of a decrease to 1.30% by Q1 2026 [2] - India's repo rate is projected to remain stable at 6.00% through 2025 [2] 2. **Sector-Specific Insights**: - The manufacturing PMI in China is projected to be 49.1 in April 2025, indicating a contraction in the manufacturing sector [5] - The Australian CPI is expected to show a quarterly increase of 0.8% in Q1 2025, reflecting ongoing inflationary pressures [5] 3. **Market Sentiment**: - Consumer confidence in the U.S. is projected to improve, with the index expected to rise to 105.3 in April 2025 [5] - The unemployment rate in Mexico is expected to remain stable at 2.4% in March 2025 [4] This summary encapsulates the key points discussed in the conference call, providing insights into global economic trends, central bank policies, and important upcoming economic indicators.

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report highlights uncertainty stemming from fluctuations in US trade policy, which has negatively impacted consumer and business sentiment in the US, while global sentiment remains relatively stable but low [1] - Despite the challenges, global retail sales and trade volumes have shown resilience, potentially due to preemptive purchasing ahead of tariff implementations [1] - Labor markets globally remain tight, and global Purchasing Managers' Index (PMI) readings indicate expansionary conditions in the first quarter [1] Summary by Sections Global Economic Indicators - US consumer and business sentiment has significantly declined due to rising tariff rates and trade policy uncertainty [1] - Global PMIs have generally remained above the expansion threshold of 50, indicating ongoing growth in manufacturing and services sectors [4][8][9] Retail Sales and Trade Volumes - Global retail sales value and volume have held up well, with year-over-year growth rates of 3.0% for value and 2.7% for volume [26][30] - Trade volumes have also shown positive growth, with a year-over-year increase of 5.7% for global trade [37] Labor Market Conditions - Labor markets are described as tight, with global unemployment rates projected to remain low [42] - Business confidence has seen fluctuations, but overall sentiment remains cautious [42][45] Inflation and Price Indices - Headline Consumer Price Index (CPI) inflation is reported at 1.5% globally, with core CPI at 3.5% [54][55] - Input prices have shown an upward trend, indicating potential inflationary pressures in the near future [21][22] GDP and Economic Growth - Real GDP growth is projected at 4.6% for the global economy, with developed markets (DM) at 2.9% and emerging markets (EM) at 2.0% [26][30] - The report forecasts continued economic expansion, albeit at a moderated pace due to external uncertainties [41][74]

Summary of Key Points from the Conference Call Industry and Company Overview - The conference call focuses on the **US Dollar (USD)** and its expected performance in **2025**, drawing parallels with **2017** and **2018**. The analysis is provided by **Morgan Stanley Research**. Core Insights and Arguments 1. **USD Decline in 2017**: The USD declined in 2017 due to trade policy, global growth, and European politics, with fiscal and Fed policy being less supportive than anticipated. Similar factors are expected to contribute to a decline in 2025 [1][4][68]. 2. **Trade Policy**: In 2025, the USD is expected to be negatively impacted by trade policy, similar to 2017. The administration is likely to use tariffs as a negotiation tactic, particularly with China, Canada, and Mexico [77][78][80]. 3. **Fiscal Policy**: The fiscal policy is not expected to be fully incorporated into growth expectations until a budget reconciliation bill is passed. This mirrors the situation in 2017, where deficit forecasts remained unchanged until late in the year [4][68][106]. 4. **Global Growth Expectations**: Global growth in 2025 is anticipated to align with expectations, contrasting with the faster-than-expected growth in 2017. This is expected to have a neutral or slightly negative impact on the USD [4][113]. 5. **European Politics**: Political stability in Europe is expected to improve, reducing EUR-negative risk premiums, similar to the underperformance of EU-skeptical parties in 2017 [4][69][117]. 6. **Central Bank Policies**: The Fed is expected to cut rates, while the ECB's policies may lead to a stronger EUR against the USD. This reflects the changes in central bank policies observed in 2017 [4][119][125]. Additional Important Insights 1. **Tariff Expectations**: The expectation of gradual increases in tariffs on imports from China and the Euro Area is highlighted, with a focus on the potential impact on the USD [78][99][103]. 2. **Investor Sentiment**: There is a significant divergence in investor expectations regarding trade policy, with many believing that tariffs will not escalate as much as previously anticipated [91][92]. 3. **Deficit Forecasts**: The analysis indicates that deficit expectations have widened significantly since the 2024 election, similar to the dynamics observed in 2016-2017 [108][109]. 4. **Market Positioning**: The USD has recently declined due to positioning by investors who expected more aggressive tariff measures than those announced [87][88]. This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the expected trends in the USD and the influencing factors.