It’s been another interesting week in financial markets. One of economic reopening, second waves, stark warnings, recession and much more. The week ahead is going to be no less eventful as investors come to grips with the reality of the situation we’re all facing while factoring in the seemingly endless supply of monetary support.
Add to all of this this the renewed tensions between the world’s two largest economies. Given that a trade war between the two was once viewed as being a major risk to the global economy, it’s extremely unwelcome now. But then, China is attracting a lot of attention about its handling of the coronavirus in the early stages of its detection and Donald Trump is facing an election in six months (in case anyone forgot). We could see a cold war scenario of increased hostilities with neither side wanting to pursue anything more for the remainder of the year.
Last, but certainly not least, we have oil. Last month’s plunge to minus $40 on the May contract is not expected to see a repeat performance. A lot has changed since then. But with the June expiry on Tuesday, who knows what chaos could ensue. Prices are inflated after an impressive rebound in recent weeks, maybe even vulnerable. The start of next week will be very interesting indeed.
Key Economic Releases and Events
Monday 18th May
Country
Relevance
Indicator Name
Period
Japan
High
GDP QQ
Q1
Japan
High
GDP QQ Annualised
Q1
Thailand
High
GDP Growth YY
Q1
Thailand
Medium
GDP Growth QQ SA
Q1
Tuesday 19th May
United Kingdom
High
ILO Unemployment Rate
Mar
United Kingdom
Medium
Avg Wk Earnings 3M YY
Mar
United Kingdom
Medium
Avg Earnings (Ex-Bonus)
Mar
Hong Kong
Low
Unemployment Rate
Apr
Germany
High
ZEW Economic Sentiment
May
South Africa
Medium
Mining Production YY
Feb
South Africa
Medium
Manuf Production MM
Feb
South Africa
Low
Manuf Production YY
Feb
Russia
High
GDP YY Quarterly Prelim
Q1
United States
Not Rated
API weekly crude stocks
11 May, w/e
Indonesia
High
7-Day Reverse Repo
May
Indonesia
High
Deposit Facility Rate
May
Indonesia
High
Lending Facility Rate
May
Wednesday 20th May
United Kingdom
Low
Core CPI YY
Apr
United Kingdom
Medium
CPI MM
Apr
United Kingdom
High
CPI YY
Apr
Thailand
High
1-Day Repo Rate
20 May
South Africa
Medium
Retail Sales YY
Feb
Canada
Medium
CPI Inflation YY
Apr
Canada
High
CPI BoC Core YY
Apr
United States
Not Rated
EIA Weekly Crude Stocks
11 May, w/e
Australia
High
Manufacturing PMI
May
Australia
High
Services PMI
May
Australia
High
Composite PMI
May
Thursday 21st May
Japan
High
Jibun Bank Mfg PMI Flash
May
United Kingdom
High
Flash Composite PMI
May
United Kingdom
High
Flash Manufacturing PMI
May
United Kingdom
High
Flash Services PMI
May
Turkey
High
CBT Weekly Repo Rate
May
Turkey
High
O/N Lending Rate
May
Turkey
High
O/N Borrowing Rate
May
Turkey
High
Late Liquidity Window Rate
May
United States
High
Initial Jobless Claims
11 May, w/e
United States
High
Philly Fed Business Indx
May
Russia
High
Industrial Output
Apr
South Africa
High
Prime Rate
May
South Africa
High
Repo Rate
May
United States
High
Markit Comp Flash PMI
May
United States
High
Markit Mfg PMI Flash
May
United States
High
Markit Svcs PMI Flash
May
United States
High
Existing Home Sales
Apr
United States
Medium
Exist. Home Sales % Chg
Apr
Russia
Low
GDP YY Monthly
Apr
Friday 22 May
Japan
High
CPI, Core Nationwide YY
Apr
Japan
High
CPI, Overall Nationwide
Apr
United Kingdom
High
Retail Sales MM
Apr
United Kingdom
High
Retail Sales Ex-Fuel MM
Apr
United Kingdom
High
Retail Sales YY
Apr
United Kingdom
Medium
Retail Sales Ex-Fuel YY
Apr
Turkey
Low
Capacity Utilization
May
France
High
Markit Mfg Flash PMI
May
France
High
Markit Serv Flash PMI
May
France
High
Markit Comp Flash PMI
May
Germany
High
Markit Mfg Flash PMI
May
Germany
High
Markit Service Flash PMI
May
Germany
High
Markit Comp Flash PMI
May
Euro Zone
High
Markit Mfg Flash PMI
May
Euro Zone
High
Markit Serv Flash PMI
May
Euro Zone
High
Markit Comp Flash PMI
May
Mexico
Low
Retail Sales YY
Mar
Mexico
Low
Retail Sales MM
Mar
Canada
High
Retail Sales MM
Mar
Canada
Medium
Retail Sales Ex-Autos MM
Mar
Country
US
The US economy’s staggered reopening is expecting to show incremental improvements in economic data this week. US business activity is expected to bounce from record lows as some states start to reopen. Housing data is expected to be persistently bad, while weekly initial jobless claims is expected to continue to decline alongside continuing claims.
The primary driver for global equities remains improving economic data as global economic activity picks up and whether renewed outbreaks will disrupt the reopening of economies. Investors will closely follow the daily COVID-19 updates to see if children continue to see spikes in new cases and if any new hotspots emerge.
It is also important to keep a close eye with the US-China relationship. President Donald Trump seems determined to keep the hard talk going against China. Trump’s threats to cut off ties with China are almost laughable as that would create an unwelcome shock to a very weak US economy. China will not back down to Trump’s threats and will quickly announce countermeasures if he follows through with any of them. A complete meltdown of US-Chinese relations is not expected, but intensifying tensions will only add to a risk-off trading environment.
US Politics
Partisan politics are expected to eventually end as much of the country still struggles from the shuttered economy. Nancy Pelosi’s $3 trillion-dollar package is needed, but Republicans will require many changes. The progressives are also unhappy with the bill, but it’s hard to imagine that some stimulus won’t pass in the near future. Both sides of the aisle will likely try to avoid further economic disaster and risky assets should see some support come the passing of another bill.
UK
The first week of lockdown easing has brought confusion, debate and worrying images of packed tubes. It’s also been accompanied by news that the worst monthly economic contraction on record (data going back to 1997) and 2% as a whole in the first quarter. When you consider that the lockdown only started a week before the end of the quarter, you can imagine what the Q2 data will look like.
Next week Andrew Bailey will be joined by three of his colleagues from the MPC to answer questions from the Treasury Select Committee on the economic impact of the coronavirus, as the country passes the peak of the first phase. I don’t expect there’ll be any surprises, just harsh truths, something investors seem willing to ignore.
Europe
Germany is officially in recession after its fourth quarter was revised lower to -0.1%. Naturally it received the good old “who cares” in the markets. Mild technical recessions are something to aim for when you’re in the midst of a severe recession with a hugely uncertain outlook. The euro area as a whole just avoided a similar fate but, again, who cares.
On a more promising note, the number of cases and deaths continues to decline which is promising. With lockdown measures easing, this will be key over the next few weeks to further easing and economies returning to something resembling normal.
Turkey
Efforts to stop the collapse in the Lira by restricting foreign transactions and preventing short-selling appear to be working, with the currency recovering from its record lows against the dollar this week. None of this changes the fact that investors are very concerned about the Turkish economy and its ability to deal with the coronavirus.
The CBRT is expected to continue cutting interest rates next week though – 50 basis point consensus – despite the currency weakness and potential inflation that lies ahead. Markets have been forgiving in the past but may not feel in such a generous mood now. Of course, the restrictions will likely affect that in the short-term but won’t last forever.
South Africa
The South African Reserve Bank is expected to cut interest rates by 50 basis points next week, although forecasts do vary. The economy was in disarray already and severe lockdown measures haven’t helped. The country has already lost its final investment grade rating so S&P’s review next Friday shouldn’t be of too much interest. Pressure may grow on Ramaphosa in the coming weeks to ease restrictions, with some already questioning whether the economic damage is greater than that of the coronavirus itself.
China
The economic recovery is expected to continue in China with the PBOC this week signalling more powerful and broad reaching stimulus measures are on the way to support growth and employment. We expect the Loan Prime Rates to see further cuts. Two dark clouds on the horizon are secondary COVID-19 outbreaks occurring in secondary cities near North Korea and Russia. The trade situation with the US is in danger of deteriorating. US administration members from the President down, labelling COVID-19 the “Chinese plague” and threatening new sanctions if China does not meet its trade agreement obligations. The Presidential election is going to be fought on who is toughest on China.
India
India’s government has loosened up lockdown rules and financial markets will carefully watch to see how bad the next wave of cases will be. The financial system is facing renewed pressure after the closure of Templeton Funds there last month. That has sparked a continuing flow of funds out of the non-bank financial sector and threatens to deepen the freeze in credit to SME’s. The government’s new budget threatens to crowd out private borrowers with their deficit financing,
Australia
Australia employment fell by 574K in April. ABS said the real figure is actually much higher.However lockdowns are being eased across the country which should see a sharp rebound. AUD has fallen this week on global economic fears. High beta to China and world trade leaves Australia markets vulnerable to downward pressure. No data of significance next week.
Japan
Japan has extended the nationwide state of emergency to the end of May with 34 prefectures reopening next week – not Tokyo or Osaka. 2nd extra budget being formulated. BoJ says willing to increase easing if needed. USD/JPY continues to range. Risk aversion return could see USD/JPY fall sharply.
Market
Oil
Oil prices are heading higher once again as WTI closes in on $30 a barrel, almost $70 above the level it plummeted to almost a month ago. I mean, that’s staggering even when you forget about the negative prices. There’s clearly a different feel to the oil market heading into this contract expiry, with production cuts having been enforced globally, either through deals or unilaterally.
But will it be enough to avert another panic selling moment? The odds have certainly reduced and there’s no sign of caution among traders but there’s plenty of time yet. There’s a fine line between confidence and complacency and we can only hope that line hasn’t been crossed or early next week it could quickly unravel.
Gold
In lockdown, it can be easy to lose track of what day it is but take one look at a gold chart and that Friday feeling is shining through. Consolidation over the last month has made this running daily commentary quite painful at times. You’d swear we’re living in relatively mundane times.
Finally it seems gold is catching up with reality, maybe even – dare I say it – acting like a safe haven (ish)? The breakout came during some weakness in risk markets and while they have bounced back, I wonder whether the gold move is being sustained more by technical factors than the fundamental that triggered the move in the first place. Whatever the reason, a break of $1,750 could kick it into a higher gear.
Bitcoin
Bitcoin enthusiasts are some of the most bullish people you’ll come across. No matter what is happening, it’s bullish for bitcoin. With central banks around the world throwing everything they have at the crisis, I can imagine there’s a lot of very, very bullish forecasts right now. We’ve seen three runs at $10,000 and the failure doesn’t appear to be shaking them at all. The excitement is palpable. If this breaks, it could be a very bullish catalyst.
New research reveals gut microbiota link to colitis: intestinal epithelial axin1 deficiency offers protective effects
A groundbreaking study conducted by Jun Sun’s research team at the University of Illinois Chicago has revealed a new and critical role of Axin1 in regulating…
A groundbreaking study conducted by Jun Sun’s research team at the University of Illinois Chicago has revealed a new and critical role of Axin1 in regulating intestinal epithelial development and microbial homeostasis. The research, published in the journal Engineering, highlights the potential therapeutic strategies for human inflammatory bowel disease (IBD).
Credit: Shari Garrett et al.
A groundbreaking study conducted by Jun Sun’s research team at the University of Illinois Chicago has revealed a new and critical role of Axin1 in regulating intestinal epithelial development and microbial homeostasis. The research, published in the journal Engineering, highlights the potential therapeutic strategies for human inflammatory bowel disease (IBD).
IBD, a chronic inflammatory disorder affecting the gastrointestinal tract, has been a significant health concern worldwide. The study focused on understanding the role of Axin1, a negative regulator of Wnt/β-catenin signaling, in maintaining gut homeostasis and host response to inflammation.
The research team analyzed Axin1 expression in human inflammatory bowel disease datasets and found increased Axin1 expression in the colonic epithelium of IBD patients. To further investigate the effects and mechanism of intestinal Axin1 in regulating intestinal homeostasis and colitis, the team generated new mouse models with Axin1 conditional knockout in intestinal epithelial cells (Axin1ΔIEC) and Paneth cells (Axin1ΔPC).
The results showed that Axin1ΔIEC mice exhibited altered goblet cell spatial distribution, Paneth cell morphology, reduced lysozyme expression, and an enriched presence of Akkermansia muciniphila (A. muciniphila) in the gut microbiota. Importantly, the absence of intestinal epithelial and Paneth cell Axin1 led to decreased susceptibility to dextran sulfate sodium-induced colitis in vivo.
Furthermore, when Axin1ΔIEC and Axin1ΔPC mice were cohoused with control mice, they became more susceptible to dextran sulfate sodium (DSS)-colitis, suggesting the protective role of Axin1 in the presence of a healthy gut microbiota. Treatment with A. muciniphila further reduced the severity of DSS-colitis, highlighting its potential as a therapeutic target.
Interestingly, antibiotic treatment did not change the proliferation of intestinal epithelial cells in the control mice. However, in Axin1ΔIEC mice with antibiotic treatment, the intestinal proliferative cells were significantly reduced, indicating the non-colitogenic effects driven by the gut microbiome.
These findings demonstrate the novel role of Axin1 in mediating intestinal homeostasis and the microbiota. The loss of intestinal Axin1 protects against colitis, likely through the regulation of epithelial Axin1 and Axin1-associated A. muciniphila. Further mechanistic studies using specific Axin1 mutations will be crucial in elucidating how Axin1 modulates the microbiome and host inflammatory response, paving the way for new therapeutic strategies for human IBD.
Jiaming Wu, editor of the subject of medicine and health of Engineering, commented, “This study provides valuable insights into the development of inflammatory bowel disease and offers potential therapeutic strategies for its treatment. By understanding the intricate interactions between Axin1, the gut microbiota, and host immunity, researchers can develop targeted interventions to restore intestinal homeostasis and alleviate the symptoms of IBD.”
The research team’s findings have significant implications for the field of gastroenterology and hold promise for the development of novel treatments for IBD. As further studies are conducted, the scientific community eagerly awaits the potential therapeutic breakthroughs that may arise from this research.
The paper “Profiling the Antimalarial Mechanism of Artemisinin by Identifying Crucial Target Proteins”, authored by Shari Garrett, Yongguo Zhang, Yinglin Xia, Jun Sun. Full text of the open access paper: https://doi.org/10.1016/j.eng.2023.06.007. For more information about the Engineering, follow us on Twitter (https://twitter.com/EngineeringJrnl) & like us on Facebook (https://www.facebook.com/EngineeringPortfolio).
About Engineering
Engineering (ISSN: 2095-8099 IF:12.8) is an international open-access journal that was launched by the Chinese Academy of Engineering (CAE) in 2015. Its aims are to provide a high-level platform where cutting-edge advancements in engineering R&D, current major research outputs, and key achievements can be disseminated and shared; to report progress in engineering science, discuss hot topics, areas of interest, challenges, and prospects in engineering development, and consider human and environmental well-being and ethics in engineering; to encourage engineering breakthroughs and innovations that are of profound economic and social importance, enabling them to reach advanced international standards and to become a new productive force, and thereby changing the world, benefiting humanity, and creating a new future.
Journal
Engineering
DOI
10.1016/j.eng.2023.06.007
Article Title
Intestinal Epithelial Axin1 Deficiency Protects Against Colitis via Altered Gut Microbiota
A receding hairline, a total loss of hair from the crown, and ultimately, the classical horseshoe-shaped pattern of baldness: Previous research into male…
A receding hairline, a total loss of hair from the crown, and ultimately, the classical horseshoe-shaped pattern of baldness: Previous research into male pattern hair loss, also termed androgenetic alopecia, has implicated multiple common genetic variants. Human geneticists from the University Hospital of Bonn (UKB) and by the Transdisciplinary Research Unit “Life & Health” of the University of Bonn have now performed a systematic investigation of the extent to which rare genetic variants may also contribute to this disorder. For this purpose, they analyzed the genetic sequences of 72,469 male participants from the UK Biobank project. The analyses identified five significantly associated genes, and further corroborated genes implicated in previous research. The results have now been published in the prestigious scientific journal Nature Communications.
Credit: University Hospital Bonn / Katharina Wislsperger
A receding hairline, a total loss of hair from the crown, and ultimately, the classical horseshoe-shaped pattern of baldness: Previous research into male pattern hair loss, also termed androgenetic alopecia, has implicated multiple common genetic variants. Human geneticists from the University Hospital of Bonn (UKB) and by the Transdisciplinary Research Unit “Life & Health” of the University of Bonn have now performed a systematic investigation of the extent to which rare genetic variants may also contribute to this disorder. For this purpose, they analyzed the genetic sequences of 72,469 male participants from the UK Biobank project. The analyses identified five significantly associated genes, and further corroborated genes implicated in previous research. The results have now been published in the prestigious scientific journal Nature Communications.
Male-pattern hair loss is the most common form of hair loss in men, and is largely attributable to hereditary factors. Current treatment options and risk prediction are suboptimal, thus necessitating research into the genetic underpinnings of the condition. To date, studies worldwide have focused primarily on common genetic variants, and have implicated more than 350 genetic loci, in particular the androgen receptor gene, which is located on the maternally inherited X chromosome. In contrast, the contribution to this common condition of rare genetic variants has traditionally been assumed to be low. However, systematic analyses of rare variants have been lacking. “Such analyses are more challenging as they require large cohorts, and the genetic sequences must be captured base by base, e.g., through genome or exome sequencing of affected individuals,” explained first author Sabrina Henne, who is a doctoral student at the Institute of Human Genetics at the UKB and the University of Bonn. The statistical challenge lies in the fact that these rare genetic variants may be carried by very few, or even single, individuals. “That is why we apply gene-based analyses that first collapse variants on the basis of the genes in which they are located,” explained corresponding author PD Dr. Stefanie Heilmann-Heimbach, who is a research group leader at the Institute of Human Genetics at the UKB at the University of Bonn. Among other methods, the Bonn researchers used a type of sequence kernel association test (SKAT), which is a popular method for detecting associations with rare variants, as well as GenRisk, which is a method developed at the Institute of Genomic Statistics and Bioinformatics (IGSB) at the UKB and the University of Bonn.
Possible relevance of rare variants in male-pattern hair loss
The research involved the analysis of genetic sequences from 72,469 male UK Biobank participants. Within this extensive data set, Bonn geneticists, together with researchers from the IGSB and the Center for Human Genetics at the University Hospital Marburg, examined rare gene variants that occur in less than one percent of the population. Using modern bioinformatic and statistical methods, they found associations between male-pattern hair loss and rare genetic variants in the following five genes: EDA2R, WNT10A, HEPH, CEPT1, and EIF3F.
Prior to the analyses, EDA2R and WNT10A were already considered candidate genes, as based on previous analyses of common variants. “Our study provides further evidence that these two genes play a role, and that this occurs through both common and rare variants,” explained Dr. Stefanie Heilmann-Heimbach. Similarly, HEPH is located in a genetic region that has already been implicated by common variants, namely the EDA2R/Androgen receptor, which is a region that has consistently shown the strongest association with male-pattern hair loss in past association studies. “However, HEPH itself has never been considered as a candidate gene. Our study suggests that it may also play a role,” explained Sabrina Henne. “The genes CEPT1 and EIF3F are located in genetic regions that have not yet been associated with male-pattern hair loss. They are thus entirely new candidate genes, and we hypothesize that rare variants within these genes contribute to the genetic predisposition. HEPH, CEPT1, and EIF3F represent highly plausible new candidate genes, given their previously described role in hair development and growth.” Furthermore, the results of the study suggest that genes that are known to cause rare inherited diseases affecting both skin and hair (such as the ectodermal dysplasias) may also play a role in the development of male-pattern hair loss. The researchers hope that the puzzle pieces they have discovered will improve understanding of the causes of hair loss, and thus facilitate reliable risk prediction and improved treatment strategies.
The research was supported by funding from the Medical Faculty of the University of Bonn. Prof. Dr. Markus Nöthen, Director of the Institute of Human Genetics at UKB and co-author of the study, is a member of the Transdisciplinary Research Area (TRA) “Life and Health” at the University of Bonn. The publication costs in open access format were funded by the DEAL project of the University of Bonn.
Journal
Nature Communications
DOI
10.1038/s41467-023-41186-w
Article Title
Analysis of 72,469 UK Biobank exomes links rare variants to male-pattern hair loss
The New York Fed DSGE Model Forecast— September 2023
This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE)…
Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula
This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since June 2023. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.
The New York Fed model forecasts use data released through 2023:Q2, augmented for 2023:Q3 with the median forecasts for real GDP growth and core PCE inflation from the Survey of Professional Forecasters (SPF), as well as the yields on ten-year Treasury securities and Baa-rated corporate bonds based on 2023:Q3 averages up to August 30. Moreover, starting in 2021:Q4, the expected federal funds rate between one and six quarters into the future is restricted to equal the corresponding median point forecast from the latest available Survey of Primary Dealers (SPD) in the corresponding quarter. The current projection can be found here.
The change in the forecast relative to June reflects the fact that the economy remains resilient in spite of the increasingly restrictive stance of monetary policy. Output growth is projected to be almost 1 percentage point higher in 2023 than forecasted in June (1.9 versus 1.0 percent) and somewhat higher than June for the rest of the forecast horizon (1.1, 0.7, and 1.2 percent in 2024, 2025, and 2026, versus 0.7, 0.4, and 0.9 in June, respectively). The probability of a not-so-soft recession, as defined by four-quarter GDP growth dipping below -1 percent by the end of 2023, has become negligible at 4.6 percent, down from 26 percent in June. According to the model, much of the resilience in the economy so far stems from the surprising strength in the financial sector, which counteracts the effects of the tightening in monetary policy. Inflation projections are close to what they were in June: 3.7 percent for 2023 (unchanged from the previous forecast), 2.2 percent for 2024 (down from 2.5 percent), and 2.0 percent for both 2025 and 2026 (down from 2.2 and 2.1 percent, respectively). The model still sees inflation returning close to the FOMC’s longer-run goal by the end of next year.
The output gap is projected to be somewhat higher over the forecast horizon than it was in June, consistent with the fact that the surprising strength of the economy is mainly driven by demand factors such as financial shocks, as opposed to supply factors. As in the June forecast, the gap gradually declines from its current positive value to a slightly negative value by 2025. The real natural rate of interest is estimated at 2.5 percent for 2023 (up from 2.2 percent in June), declining to 2.2 percent in 2024, 1.9 percent in 2025, and 1.6 percent in 2026.
Forecast Comparison
Forecast Period
2023
2024
2025
2026
Date of Forecast
Sep23
Jun23
Sep24
Jun24
Sep25
Jun25
Sep26
Jun26
GDP growth (Q4/Q4)
1.9 (0.2, 3.6)
1.0 (-1.9, 4.0)
1.1 (-4.0, 6.3)
0.7 (-4.2, 5.7)
0.7 (-4.4, 5.8)
0.4 (-4.7, 5.5)
1.2 (-4.2, 6.6)
0.9 (-4.5, 6.3)
Core PCE inflation (Q4/Q4)
3.7 (3.4, 3.9)
3.7 (3.3, 4.2)
2.2 (1.5, 3.0)
2.5 (1.6, 3.3)
2.0 (1.1, 2.9)
2.2 (1.2, 3.1)
2.0 (1.0, 3.0)
2.1 (1.1, 3.2)
Real natural rate of interest (Q4)
2.5 (1.3, 3.7)
2.2 (1.0, 3.5)
2.2 (0.8, 3.7)
1.8 (0.3, 3.2)
1.9 (0.3, 3.4)
1.5 (-0.1, 3.0)
1.6 (-0.0, 3.3)
1.3 (-0.4, 3.0)
Source: Authors’ calculations. Notes: This table lists the forecasts of output growth, core PCE inflation, and the real natural rate of interest from the September 2023 and June 2023 forecasts. The numbers outside parentheses are the mean forecasts, and the numbers in parentheses are the 68 percent bands.
Forecasts of Output Growth
Source: Authors’ calculations. Notes: These two panels depict output growth. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the June 2023 forecast.
Forecasts of Inflation
Source: Authors’ calculations. Notes: These two panels depict core personal consumption expenditures (PCE) inflation. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the June 2023 forecast.
Real Natural Rate of Interest
Source: Authors’ calculations. Notes: The black line shows the model’s mean estimate of the real natural rate of interest; the red line shows the model forecast of the real natural rate. The shaded area marks the uncertainty associated with the forecasts at 50, 60, 70, 80, and 90 percent probability intervals.
Marco Del Negro is an economic research advisor in Macroeconomic and Monetary Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.
Pranay Gundam is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.
Donggyu Lee is a research economist in Macroeconomic and Monetary Studies in the Federal Reserve Bank of New York’s Research and Statistics Group.
Ramya Nallamotu is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.
Brian Pacula is a research analyst in the Federal Reserve Bank of New York’s Research and Statistics Group.
How to cite this post:
Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula, “The New York Fed DSGE Model Forecast— September 2023,” Federal Reserve Bank of New York Liberty Street Economics, September 22, 2023, https://libertystreeteconomics.newyorkfed.org/2023/09/the-new-york-fed-dsge-model-forecast-september-2023/.
Disclaimer The views expressed in this post are those of the author(s) and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the author(s).
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