Link to full report including important disclosures:
As expected, the Greek crisis is abating as Greece implements its austerity plan and the EU offers a safety net. Meanwhile tensions between the US and China build as China delays the seemingly inevitable revaluation of its currency.
United States: Health care reform: some negative side effects?
We see virtually no impact on the current economic recovery from the health care reform recently signed into law, but we are concerned about the continued failure to address the long-run budget challenges.
Canada: Fast track economy
Three important factors limited the slowing in inflation during the economic downturn: 1) less FX pass-through; 2) shallow consumer slowdown; 3) rising regulated prices.
Euro area: Greek deal is another step forward
The Greek package has been approved by European heads of state and government to safeguard financial stability in the euro area as a whole. This standby facility reduces the potential damage that an economic shock could cause for Greece as well as contagion risks for other countries. But it is probably too early to argue that the sovereign turmoil is over.
Japan: Revised view: BoJ's exit to be delayed further
The probability of sustained political pressure on BoJ to maintain an accommodative monetary policy has started to increase. As a result, we have revised our projection for when we think BoJ will switch to a policy of increasing interest rates from our previous estimate of March 2011 to September 2011.
Emerging Asia: Asia's investment story, the sequel
Our country ranking analysis shows China, along with Taiwan and Hong Kong will lead the Asian investment cycle.
Emerging EMEA: SARB turns dovish
The SARB move has prompted us to push the forecast for our first hike to November and lower the end-year repo rate to 7.0%.
Lat Am: Banxico's first hike in Nov 2010 & IADB feedback
In Mexico, we are pushing back our central bank rates hike call to Q4 2010 from Q3. We now expect Banxico to hike 25bp at its November meeting, taking the Fondeo rate to close a 4.75%. For 2011 we keep our year-end Fondeo rate estimate unchanged at 6.0%.
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