麦格理报告：全球宏观经济年中展望 Global Economic and Markets Outlook: Mid-Year Update The Tariffs （47P）

8 July 2019 Global Sales and Trading personnel at Macquarie are not independent and, therefore, the information herein may be subject to certain conflicts of interest, and may have been shared with other parties prior to publication. Note: To the extent Macquarie Research is referenced, it is identified as such and the associated disclaimers are included in the published research report. Please refer to the important disclosures www.macquarie.com/salesandtradingdisclaimer. MACRO STRATEGY Economists/Strategists Macquarie Securities (Australia) Limited Ric Deverell +61 2 8232 4307 ric.deverell@macquarie.com Justin Fabo +61 2 8232 0696 justin.fabo@macquarie.com Hayden Skilling, CFA +61 2 8232 2623 hayden.skilling@macquarie.com Macquarie Capital Markets Canada Ltd. David Doyle, CFA +1 416 848 3663 david.doyle@macquarie.com Neil Shankar +1 416 607 5055 neil.shankar@macquarie.com Macquarie Capital Limited Larry Hu, PhD +852 3922 3778 larry.hu@macquarie.com Irene Wu +852 39223796 irene.wu@macquarie.com Lynn Zhao +86 21 2412 9035 lynn.zhao@macquarie.com Melody Dong +86 21 2412 9085 melody.dong@macquarie.com Macquarie Capital (Europe) Limited Tom Price +44 203 037 2849 tom.price@macquarie.com Vivienne Lloyd +44 20 3037 4530 vivienne.lloyd@macquarie.com Serafino Capoferri +44 20 3037 2517 serafino.capoferri@macquarie.com Jim Lennon, Senior Commodities Consultant +44 20 3037 4271 jim.lennon@macquarie.com Eimear Daly +44 20 3037 4802 eimear.daly@macquarie.com Macquarie Bank Limited Singapore Branch Gareth Berry +65 6601 0348 gareth.berry@macquarie.com Macquarie Futures USA LLC Thierry Wizman +1 212 231 2082 thierry.wizman@macquarie.com Macquarie Bank Limited Hong Kong Branch Trang Thuy Le +852 3922 2113 trang.thuyle@macquarie.com This publication has been prepared by Sales and Trading personnel at Macquarie and is not a product of the Macquarie Research Department. Global Economic and Markets Outlook: Mid-Year Update The Tariffs and the Damage Done... This year marks the 10th anniversary of the global expansion, making it the longest in the post-war period. While global GDP growth has averaged a respectable 2¾% saar – a pace similar to the average of the past 40 years – in the main it has felt unfulfilling, as central banks have worked (mostly unassisted by the political classes) to support output in the face of numerous structural headwinds. While we don’t think expansions die of old age, the ongoing slowdown, along with the recent tariff increases, has seen markets once again contemplate the possibility of recession. The big “known unknown” is the path of the trade war. While the probability of a further escalation is difficult to assess, in our central scenario we assume the US announces a 10% tariff on the remaining imports from China in September, before a longer-lasting “ceasefire” in the New Year, just in time for the US election (we see the probability of an H2 escalation as something like 60%). In this world, after slowing to around 2¼% saar in Q2, global GDP growth is likely to dip to a little below 2% by Q4, before gradually recovering next year, as Fed easing, Chinese stimulus (we expect another push in early Q4) and diminished trade uncertainty support activity.  While the risk of recession continues to build – the NY Fed’s yield curve-based model estimates a probability of around 30% – the slowdown still feels more like a repeat of 2012 and 2016 than the beginning of something more sinister.  With trade and industrial production already weak, however, the risk is that business investment continues to slow in the face of higher tariffs and policy uncertainty (as has already occurred in the UK as Brexit uncertainty weighs). Businesses could also slow hiring, which in turn could hit consumption. We expect the Fed to cut the fed funds rate three times over the next 6 months, while the ECB will cut the deposit rate by 10 basis points to minus 50, and possibly restart QE. Long-term interest rates are likely to fall modestly further in H2, but then move a little higher over 2020 as growth recovers. However, with growth in the US expected to be around trend next year, it is unlikely the Fed will be able to reverse the cuts ahead of the next mini downturn that could arrive sometime in 2021, suggesting limited upside for yields. Higher tariffs could see currency safe havens benefit in H2, with the US dollar and the Yen the prime beneficiaries. However, as the year comes to an end, enthusiasm for a “weak” dollar among the US political classes could build. For commodity markets this suggests further downward pressure over the remainder of this year, although as always performance will diverge, with gold benefiting from the uncertainty while iron ore and copper come under pressure. Equity markets are already pricing recovery, and could feel disappointed in the next few months as growth slows. However, history suggests that the market