A few data points have come out on global trade over the past week so it’s worth taking a look at what has been a really key theme for the global economic recovery and acceleration that we have been seeing. Indeed, the global trade slowdown (basically a near-miss global recession) in 2015/16 was a key driver behind the rout in commodities and global market turmoil that culminated in two stock market corrections and a drive lower in bond yields. It also helped spur on the ECB, BOJ, and China to undertake further stimulus, which has been key in driving the improvement that we have seen in global trade.
Anyway, as for the data, at a high level, the CPB Global Trade Monitor data showed global trade growth running at the strongest pace since the 2010 bounce back from the global financial crisis. This improvement has been matched in the industrial production growth stats. It’s also verified with the RWI/ISL global container throughput data, which shows volumes running above trend. Shipping cost indexes, while somewhat volatile, have also recovered notably, and are something we are watching closely for clues on the next steps.
But overall the key message is that global trade growth is looking good, despite the protectionist rhetoric, and this is a key piece of the puzzle in the synchronized global growth theme, and hence supports the overweight growth (equities) and underweight defensives (bonds) bias we’ve been maintaining.
The main points on the key global trade data sets we monitor are:
