Global Economic Research09 February 2024J P M O R G A Nwww.jpmorganmarkets.comContentsFrontier capital flows: Whatever gets you through the night12US: All signs point to slower job gains in 202414Euro area underlying inflation still above 2%17Mexico: Disinflation arrives20Oiling the wheels of the Brazilian economy22CEE wage growth: slowing, but slowly25 Global Economic Outlook Summary4Global Central Bank Watch6Nowcast of global growth7Selected recent research from J.P. Morgan Economics9J.P. Morgan Market Watch10 Data Watches United States28 Focus: Rent inflation is cooling but unlikely in free fall34Euro area35Japan39Canada42Mexico44Brazil46Argentina48Andeans50United Kingdom52Sweden and Norway56Emerging Europe58South Africa63Australia and New Zealand64China, Hong Kong, and Taiwan66Korea70ASEAN72India76Asia focus78 Regional Data Calendars79Economic and Policy ResearchBruce Kasman(1-212) 834-5515bruce.c.kasman@jpmorgan.comJoseph Lupton(1-212) 834-5735joseph.p.lupton@jpmorgan.comMichael S Hanson(1-212) 622-8603michael.s.hanson@jpmchase.comJPMorgan Chase Bank NAGlobal Data Watch•Sticky inflation and resilient growth risk would likely limit space for easing•RBA and BoC remain hawkish relative to their DM counterparts •China CPI shows deeper slide into deflation•Next week: Soft US CPI and RS; European labor market reportsIt�s not how you fall that matters; it�s how you landTiming the start of central bank easing cycles has been a significant market focus in recent months. We have pushed back against a rising tide of market optimism for an early start and recent central bank rhetoric, along with evidence of US and global growth resilience, is now aligning expectations with our view that easing is more likely to begin around midyear. Despite this shift, there remains a firm consensus that substantial easing lies ahead. Both our economists and market pricing incorporate a roughly 200bp decline in policy rates for the Fed, ECB, and BoE by the end of next year (Figure 1). While market pricing incorporates some risk of aggressive easing in the event of a recession, the easing in broader financial conditions of late points to a close linkage between rising risk appetite and optimism that substantial central bank easing will lay the groundwork for a sustained expansion. From a top-down perspective, we have recognized the improved prospects for a soft-landing and now see this outcome as a roughly equal in likelihood to a “boil the frog� slide toward recession. Recent developments showing solid private sector income gains and still healthy balance sheets, combined with easing financial conditions, are promoting resilience. Nevertheless, we remain skeptical of a soft-landing as these same developments also carry risks for more limited central bank easing. Despite tight policy, global growth has proceeded at an above-trend pace in recent quarters, with our economists� forecast for GDP...
