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24 Feb 2019, 21:44
Kudos
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With the trade dispute between the world’s two largest economies (US and China) continuing into 2019, and a less than optimistic economic outlook painted by International Monetary Fund, Organisation for Economic Co-operation and Development and market analysts, what does 2019 hold for the global financial market?
At the recent NBS webinar on 9 January 2019, Associate Professor of Banking and Finance, Lee Boon Keng, shared his assessment to more than 40 faculty, students and alumni.
He began the session by highlighting the risks and uncertainties in 2019. “Risks are known unknown and uncertainties are unknown known. The market can deal with risks but it cannot deal with uncertainties,” said Assoc Prof Lee
He also shared the key indicators to look out for in 2019 – the spread between two-year and ten-year US Treasury yield and China's broad money supply growth or M2.
An inversion in the two-year and ten-year yield spread curve predicts a recession. Assoc Prof Lee emphasised that while the current yield spread is low, it is not inverted.
Assoc Prof Lee also shared how China's M2 growth, a key gauge of inflation, leads the Purchasing Managers' Index (PMI). Currently, there is no acceleration in M2 growth and therefore no positive growth surprise.
Rounding up his presentation, Assoc Prof Lee concluded, “Uncertainties could ameliorate risks, but if they fail to do so, brace for a crisis!”
At the recent NBS webinar on 9 January 2019, Associate Professor of Banking and Finance, Lee Boon Keng, shared his assessment to more than 40 faculty, students and alumni.
He began the session by highlighting the risks and uncertainties in 2019. “Risks are known unknown and uncertainties are unknown known. The market can deal with risks but it cannot deal with uncertainties,” said Assoc Prof Lee
He also shared the key indicators to look out for in 2019 – the spread between two-year and ten-year US Treasury yield and China's broad money supply growth or M2.
An inversion in the two-year and ten-year yield spread curve predicts a recession. Assoc Prof Lee emphasised that while the current yield spread is low, it is not inverted.
Assoc Prof Lee also shared how China's M2 growth, a key gauge of inflation, leads the Purchasing Managers' Index (PMI). Currently, there is no acceleration in M2 growth and therefore no positive growth surprise.
Rounding up his presentation, Assoc Prof Lee concluded, “Uncertainties could ameliorate risks, but if they fail to do so, brace for a crisis!”
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