Wealthy Nations Daily Update - US Department of Treasury

In the key findings of the report the US Department of Treasury did not hold back on the difficulties the US economy is facing with regards to global growth or the impact of a strong dollar on the domestic economy or the fact that other economies should be doing more to promote growth. Its reads;

“In contrast to solid U.S. performance, global economic outcomes have been disappointing and remain of concern. Not only has global growth failed to accelerate, but there is worry that the composition of global output is increasingly unbalanced. Weak global growth importantly reflects an insufficiently comprehensive mix of macroeconomic policies in some key countries, which leaves substantial scope for efforts to support domestic demand. Alongside strengthening U.S. economic activity, lackluster growth abroad, and falling commodity prices the broad nominal trade weighted dollar appreciated by 7.9 percent in the second half of 2014, with another 4 percent appreciation in the first quarter of 2015”

“The global economy should not again rely on the United States to be the only engine of demand. Doing so will not lead to a pattern of strong, sustainable and balanced global growth, the very aim of the G-20. To achieve this objective, many countries need to implement a balanced policy mix. Excessive reliance on any single lever of policy is not enough. Rather, policymakers need to use all levers, including fiscal stimulus where fiscal space exists, to complement monetary policy accommodation. In conjunction, many countries also need to implement structural reforms to help boost potential growth and address persistent stagnation. Balanced approaches to 3 macroeconomic policies are particularly needed in large surplus countries, notably in Germany, China, Japan, and Korea – consistent with agreed G-7 and G-20 commitments”

Also in this latest semi-annual report to congress the US Treasury shifted its previous assessment that the Chinese Renminbi was ‘significantly undervalued’ to now saying it was “below its appropriate medium-term valuation”. However, the Treasury does believe an appreciating currency could help speed up domestic reform in China. "Further currency appreciation is key ... and will support the purchasing power of Chinese consumers and help shift production towards non-traded goods and services," the report said.

In a different tone to previous reports the Treasury stated “Given economic uncertainties, volatile capital flows and prospects for slower growth in China, the near-term trajectory of the RMB is difficult to assess,” adding “However, our judgment is that the RMB remains below its appropriate medium-term valuation.” They went on to say that there were many market factors exerting downward pressure on the RMB, including the unwinding of carry trades, however these were likely to be transitional towards a more free floating currency. With the PBoC longer term intentions in mind the report went on to say “Ultimately, the implementation of the new foreign exchange mechanism — and specifically, whether China allows the RMB to respond flexibly to appreciation as well as depreciation pressures — will indicate how responsive the new mechanism is to market forces,”

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.