The adverse effect of the latest surge in oil prices is likely to be much smaller than those arising from previous shocks. Advanced and emerging economies have substantially reduced the amount of oil used per unit of output.

Natural gas imports from Russia have fallen sharply, and storage levels are extremely low. Europe’s high dependence on the country creates vulnerabilities and limits policy options. In the short term, Europe would likely be able to manage even in case of a full disruption. But a full replacement of Russian imports does not seem feasible for a number of reasons. Among them are infrastructure constraints and the lack of alternative supplier capacities. Thus, politically and/or economically painful demand-side adjustments would be needed. Nonetheless, Europe should begin to invest in reducing vulnerabilities while there is time.

High oil prices since end-2020 are largely driven by pervasive supply shortages from the lack of adequate investment. Current futures contracts point to Brent average oil prices of $73/bbl and $69/bbl in 2022 and 2023, respectively.

Inflation is rising due to higher food and energy prices, deglobalization, and supply chain disruptions. In addition, the recent increases in global CPI stem from widespread monetary easing and expansionary fiscal policy. Inflation may exceed central bank targets through 2022 and into 2023.

One motivation for Fed QE was always to push investors out of US Treasuries into riskier assets. Previous QE programs achieved this by pushing down yields and flattening the yield curve. Successive Fed QE programs increasingly embraced this underlying rationale for LSAPs, culminating in QE3 that had a weighted average maturity far longer than previous programs, consistent with the idea that one objective of QE is to take duration out of the market.

Base metal prices have far exceeded our initial forecasts, supported by low inventory. We expect average base metal prices to be 44% higher in 2021 and decline by 5% in 2022 as some supply constraints ease.

In our last edition of Sticky Notes in 2018, we look at President Xi's reform anniversary speech, Venezuela's future, NAFTA termination, oil markets, and a potential U.S. government shutdown.

In this edition of Sticky Notes, we look at oil markets ahead of the OPEC+ meeting, consumer privacy laws, U.S.-China trade talks, and end-of-year book recommendations.

In this edition of Sticky Notes, we look at key issues facing the incoming U.S. Congress, new realities in Mexico, U.S.-China trade talks, and potential auto tariffs.

In this edition of Sticky Notes, we look at takeaways from the U.S. mid-term elections, the latest U.S.-China trade talks, Brazil in the wake of a newly elected government, and U.S. soybean exports.

Global debt declined by $1.5 trillion to $247 trillion ($187 trillion ex-financials) in Q2 2018-mainly driven by mature markets. In contrast, EM debt continues to rise, topping $71 trillion in Q2 ($60 trillion ex-financials).

If you would like to receive the Sticky Notes email, please send us an email' here ' with your information. This week is our "all politics" edition o.

Time to Pay the Piper ' The global debt mountain topped $247 trillion in Q1 2018, with the non-financial sector accounting for $186 trillion of that'.

On April 19, the IIF hosted the second annual Washington Policy Summit, bringing together U.S. administration officials, leading policy analysts, and.

The mapping from wider fiscal deficits to the current account has been imperfect, reflecting offsetting moves in other sectors of the economy and a.

One month ago, average hourly earnings surprised to the upside, sparking anxiety that the US economy may - finally - be starting to overheat. We ar.

Last year we published a series of reports on red versus blue states, "¦ which showed that red state labor markets are materially lagging blue ones. W.

Longer-term Treasury yields have risen sharply year-to-date. A key question for markets is whether the sell-off will continue. We examine the various.

Trade policy is becoming a key area of focus for the administration. We examine the adjustment in the US current account in recent years, looking t.

Low inflation has been a conundrum in recent years, "¦ but currently nowhere more so than in the Euro zone and Japan. We evaluate how G-3 inflation ha.

Red states are falling behind blue states in the jobs boom. But the divide between red and blue states goes deeper than just job creation. We develop.

We have shown that red states are falling behind blue states in the jobs recovery. We examine three possible drivers: (i) demographics; (ii) opioids;.

We compare the US labor force participation rate to other G10 economies. The decline in the US participation rate is a clear outlier, especially wh.

Red states are falling behind blue states in the labor market recovery, a phenomenon we documented in a Global Macro Views earlier this week. We fo.

Red states are not benefitting the same as blue states from jobs growth, with the nature of th.

The October labor market data on balance were a hawkish signal for the Fed, because the most dovish component - the drop in average hourly earnings gr.

Congress and the Administration have pivoted to tax reform; many obstacles are in the way We think it's unlikely the President will sign comprehensiv.

In a recent Global Macro Views , we have shown that this year's drop in US inflation - arguably one of the key macro surprises of 2017 - is to an impo.

We expect an uptick in inflation in coming months, due to a normalization of the price path for specific PCE elements. The drivers behind this process.

We have shown that large movements in a handful of categories have thrown off inflation readings in the US and the Euro zone. We look for similar dist.

We look more closely at the recent pick up in core inflation, and find that much of it can be explained by just three sectors, all related to tourism.

We update our assessment of the labor market following the latest round of data for August. ' We project the U-3 unemployment rate in a range of 4.0 -.

The striking slowdown in world trade growth over the past five years has been the subject of much research. In the first of a two-part series on trade.

We provide some background for the discussion on taxing foreign held income. We document the size and nature of reinvested earnings that US-based firm.

Since our initial piece, the participation rate has drifted up, a trend that - should it continue - would tend to slow further declines in the unemplo.

Our latest US Financial Regulatory Update, with key highlights from recent Congressional testimony by the heads and nominees of the lead US regulatory.

We start to examine why average hourly earnings growth is so low. We show that the degree of dispersion in wage growth across sectors has risen, even.

Markets seemed to move last week based on President Trump's July 12th statement that his Administration would impose tariffs or quotas on steel. ' As.

We examine the decline in core PCE inflation, looking at individual components within the inflation basket. We find that the decline can be accounted.

We examine the labor market "churn" and perform a sensitivity analysis on the US unemployment rate. Factoring in some slowing in hiring and a gradual.

Why is Retail Employment Falling so Sharply? We examine whether changing shopping habits can explain large job losses. Our results show that the subs.

Mr. Phillips Goes to Washington In the aftermath of the Fed meeting, and following our previous analysis, we show that the Phillips curve plays an im.

PM May's snap election backfires spectacularly and a Conservative power struggle could follow. Hung parliament with the Northern Irish DUP providing C.

We are introducing a new publication, which we are calling Global Macro Views . This product aims to complement existing IIF research, by discussing b.

Since January 2017, the ECB has been allowed to buy sovereign bonds under its public sector purchase program (PSPP) at yields below the deposit rate,.

When it comes to global growth, sentiment has turned more upbeat in recent months" but many remain cautious over the US outlook, one reason why marke.

We expect GDP growth of 1.4% in 2017 and 0.0% in 2018 Reality is starting to bite as inflation is putting downwards pressure on consumption " " and.

Abenomics is still far away from achieving any meaningful results. However, this may be the biggest chance for Japan to finally get out from its more.

French voters go to the polls on April 23 for the presidential election Emmanuel Macron and Marine Le Pen are currently tied in first place in the opi.

While optimism in businesses and households has remained at elevated levels, hard data from the US economy has been much weaker in the first quarter.

We change our interest rate forecast to incorporate a balance sheet runoff later this year Reduction in the Fed's assets translate to additional "synt.

The euro area continued its robust recovery in 2016, with GDP growth of 1.7%, outpacing the US. We expect growth to remain robust in 2017 and 2018. In.

PM Rutte achieves another victory with 22% of the vote Loss of momentum led to Wilder's defeat Rutte's party VVD remains the largest party despite los.

Federal Reserve hikes the interest rate to 1.00% Monetary policy statement little changed' ' ' and the dot plot remained broadly the same Yellen st.

We expect robust GDP growth to continue, driven by domestic demand Investment is set to boom, with the housing market a particular highlight Germany i.

The Dutch parliamentary election of March 15 kicks off a busy election year in Europe. It's the first in a series of European elections in which a rig.

We expect fiscal stimulus to fall short of lofty expectations We assume trade tension will stay shy of broad-based tariffs and more disruptive measure.

Headline inflation has risen above target for the first time in four years. Inflation has turned positive in all euro area countries-specter of deflat.

The European political outlook continues to evolve. This report updates on the latest developments in France, Germany and Italy. In France, Emmanuel.

D j vu for Greece: Hoping for a compromise on debt relief A recent visit to Athens has brought back a sense of d j vu! Unfortunately, Greece is.

Job growth accelerated in January and labor market appears strong Productivity growth has picked up and investment is likely to increase Disappointing.

Le Pen takes the lead from Fillon in the latest French first-round polls Macron is building momentum and is a serious contender SPD nominates Schulz a.

UK Supreme Court upholds parliamentary sovereignty More involvement from Parliament will not significantly alter course Hard Brexit from EU remains ba.

Core inflation remains weak, despite massive monetary stimulus We think the balance of risks to inflation and growth are no longer to the downside" ".

Out means completely out In a long anticipated speech, Prime Minister May today laid out the principles informing her plan for exiting the European U.

No changes to existing policy measures ECB will look through upside news in inflation as "temporary" " " but pressure on ECB to end asset purchases i.

At the ECB's Governing Council meeting on Thursday December 8, we expect President Mario Draghi to announce an extension of the asset purchase program.

Economic resilience is coming to an end. Uncertainty is the only certainty in the Brexit process. Trump p.

At Thursday's meeting, the ECB Governing Council will face stubbornly low inflation despite an economic growth outlook that is slightly better than ex.

Article 50 to be triggered before April 2017. UK priorities point towards a "hard" Brexit. Financial services are in the crosshairs. Initial calm, but.

When the ECB Governing Council meets on Thursday, September 8, it will see a challenging landscape. The impact of Brexit on the region's financial mar.

Corporate investment will be held back. Government can do little to undo damage from uncertainty. Winners and los.

Today's flash PMI for the UK and the euro area confirms our view that the economic impact from Brexit is asymmetrical, with the UK bearing the brunt o.

Europe is most affected by spillovers, the United States less so. More d.

The unexpected Brexit win by a solid margin (51.9% to 48.1%) has cascaded across international financial markets. The GBP has taken an unprecedented o.

A PERFECT STORM FOR MARKETS? Global equities slumped again today, with major government bond yields dropping to new record lows; further yen strength.

As the ECB prepares for its monetary policy meeting on Thursday, June 2nd, the focus is likely to remain on the implementation of the various policy m.

After refocusing on credit easing in their March meeting, Draghi and the Council are not expected to make any major policy changes when they meet on T.

Merkel is weakened domestically. France is entering a year of presidential elections. There is very little polit.

When the Governing Council meets on Thursday, March 10th, President Mario Draghi faces difficult challenges-responding to disinflationary pressures in.

One year after the ECB's unprecedented QE decision, the Governing Council continues to face the challenges of low inflation and moderate growth when i.

With the euro continuing to weaken, and short-term Euro Area bond yields falling to fresh record lows amidst raising expectations of additional stimul.