A dominant anxiety in financial markets remains the level of long-term interest rates. It is worth beginning, though, with the real economy, where the news of recent days has been more reassuring. Haver’s proprietary calculation of world GDP growth suggests the global economy held up well in the second quarter, expanding at close to its long-run average pace and defying the sharper slowdown many had feared (chart 1). The August flash purchasing managers’ indices tell a similar story, with most of the major economies both in expansion and still improving — though, as ever, the composite readings conceal a more uneven picture beneath (chart 2). From South Korea, whose trade figures are among the world’s most timely, comes the same message, and a pointed one about the artificial-intelligence boom: semiconductor exports have continued to surge (chart 3). Yet the market’s gaze stays fixed on US yields, and a decomposition explains why they are being watched so closely — the rise has come overwhelmingly from the real component, not from any meaningful revival of inflation expectations (chart 4). That, one might argue, is not a passing technical matter but a structural one, rooted in who is willing to fund the US government. The rest of the world now funds a steadily shrinking share of its debt (chart 5), and the surplus nations that once recycled their savings into Treasuries are turning, instead, to gold (chart 6). It is against this backdrop that Treasury Secretary Scott Bessent's recent remarks that the government may intervene in the market to support its debt have drawn attention.
Introducing
Andrew Cates
in:Our Authors
Andy Cates joined Haver Analytics as a Senior Economist in 2020. Andy has more than 25 years of experience forecasting the global economic outlook and in assessing the implications for policy settings and financial markets. He has held various senior positions in London in a number of Investment Banks including as Head of Developed Markets Economics at Nomura and as Chief Eurozone Economist at RBS. These followed a spell of 21 years as Senior International Economist at UBS, 5 of which were spent in Singapore. Prior to his time in financial services Andy was a UK economist at HM Treasury in London holding positions in the domestic forecasting and macroeconomic modelling units. He has a BA in Economics from the University of York and an MSc in Economics and Econometrics from the University of Southampton.
Publications by Andrew Cates
Global| Aug 26 2026Charts of the Week: Resilient Growth, Restless Yields
by:Andrew Cates
|in:Economy in Brief
Global| Aug 20 2026Charts of the Week: The Cost of Capital Climbs
Financial markets have been unsettled this week by a familiar cast of forces, though the balance among them has shifted. Renewed tension in the Middle East has nudged oil prices higher without seriously disturbing the wider tone, while in Japan the yen’s slide to multi-decade lows kept the authorities on intervention watch and the Bank of Japan under pressure to act. But the development that has dominated is the continued climb in long-term interest rates, which across the major economies now stand close to their highest in two decades — a move driven far more by real yields than by any meaningful revival of inflation fears. That the long end should be rising even as disappointing US data have led investors to pare back their expectations of further Federal Reserve tightening — the short end falling as the long end climbs — is a thread running through this week's charts. We begin with that near-term picture: a softening in US data surprises and the accompanying, albeit very modest, easing at the short end of the curve (chart 1), together with the fragile state of domestic demand in Japan that complicates the yen’s defence (chart 2). We then turn to the deeper forces pushing long rates higher. Rearmament is adding a large and largely non-negotiable claim on the public purse, with defence budgets across Europe climbing steeply (chart 3). The flow-of-funds accounts show where the strain comes to rest, with governments across the advanced world in deficit and drawing on a finite pool of saving (chart 4) — saving that is concentrated, more than ever, in China (chart 5). And beneath it all lies the question of whether the investment now under way will deliver the productivity gains needed to justify a higher cost of capital; the latest US figures give little comfort (chart 6).
by:Andrew Cates
|in:Economy in Brief
- Global| Aug 19 2026
The Contest for Capital
The world is being pushed to invest more than it has in decades.
A world on autopilot Every few months the International Monetary Fund publishes a projection of the world economy, and the Blue Chip panel of forecasters, along with other bodies, does something similar each month; together they help to set the consensus against which everything else is judged. It describes a world returning gradually to normal: global growth a little above 3%, inflation drifting back to target, and US policy rates continuing to ease from their peaks. Its most consequential feature is one that is easy to miss, because it sits in an accounting identity rather than being stated as a view: investment in the advanced economies is projected to remain close to 22% of GDP for the rest of the decade, essentially flat, with national saving tracking it (chart below). The large external imbalances — the US deficit and the surpluses of China, Germany and the oil exporters — are expected to persist more or less unchanged, and the real interest rate that balances saving against investment drifts gently lower. It is, in short, a forecast of continuity, and this piece argues that continuity may well be the wrong assumption.
by:Andrew Cates
|in:Viewpoints
Global| Aug 13 2026Charts of the Week: Beneath the Calm
Global markets kept a composed tone this week even as the backdrop grew more unsettled. Renewed fighting in the Middle East lifted oil prices but left equities largely unmoved, the earlier decline in semiconductor shares having faded as earnings held up; long-term interest rates continued to grind higher, with the increase concentrated in real yields rather than inflation expectations; and the major central banks, having diverged over the course of the year, are now expected to move in different directions. Inflation, for its part, remained subdued. The charts that follow take up these themes. The first two draw on this month’s forecasting round: growth expectations for 2026 have been revised up across the AI-exposed economies of Asia and trimmed across much of the West, pointing to a global cycle growing at two speeds (chart 1), while in the United States the resilience of the expansion increasingly reflects business investment rather than household spending (chart 2). The next two concern the benign inflation backdrop: price data have continued to undershoot forecasts even as supply-chain pressures have edged higher (chart 3), and the oil market has remained well supplied in part because Chinese import demand has fallen sharply (chart 4). The final two look beyond the cycle: the current-account imbalance between the United States and China has widened close to record levels, a theme given fresh salience by Japan’s recent currency intervention (chart 5), while the longer-run shift towards wind and solar power has continued largely irrespective of the week’s events (chart 6).
by:Andrew Cates
|in:Economy in Brief
Global| Aug 06 2026Charts of the Week: A Resilient World Economy, and Its Price
The global economy has proved stubbornly resilient this summer, even as the backdrop has grown noisier. A fresh flare-up in the Middle East, reports of official intervention to arrest a slide in the yen, and a bout of nerves over the vast sums now being committed to artificial intelligence have all unsettled sentiment, while central banks — the Federal Reserve among them — have turned markedly more hesitant about cutting rates than they appeared only a few months ago. Yet the incoming data have held up better than feared, with a broad gauge of global activity climbing back above its normal trend and shrugging off the gloom (chart 1). If anything, the pressure on interest rates has been upward rather than down. Forecasters have spent recent months marking up their expectations for policy rates a year ahead across almost every major economy (chart 2), and the shift looks more than cyclical: estimates of the neutral rate, the resting point for real rates, now stand higher than they did in 2019 in every advanced economy (chart 3), lifted above all by the swelling supply of government debt (chart 4). Behind that repricing lies an investment cycle that is quietly gathering pace and, encouragingly, one still financed largely out of profits rather than borrowing (chart 5). It is not without its constraints, however. The real price of copper, the indispensable metal of electrification, sits close to a multi-decade high — a reminder that a capital-hungry world is beginning to strain against physical limits (chart 6).
by:Andrew Cates
|in:Economy in Brief
- Global| Aug 04 2026
The Real Rate Has Turned — and the World Still Expects the Old Normal
For much of the past decade, the working assumption was that interest rates, having collapsed after the financial crisis, would eventually fall back once the latest disturbance had passed. Events are now overturning that assumption—and not only in the United States. Both consensus forecasters and the Federal Reserve's model for estimating the equilibrium rate across advanced economies point to the same conclusion: the real rate of interest—the price of capital after inflation is stripped out—has risen and is likely to remain higher. The question is no longer whether this shift has occurred, but why so much of the financial system is still configured for a world we have left behind.
The evidence is clearest in the United States. The driver is the demand for capital: an investment cycle in artificial intelligence, defence and the reshoring of supply chains is competing for scarce savings, capacity and labour, and that raises the return the economy has to offer to fund it. It now shows up in the forecasts. Over the past six months the Blue Chip consensus for the US policy rate one year ahead has risen by about 44 basis points, while the consensus for inflation over the same horizon has barely changed; only around ten of those basis points reflect higher expected inflation. The remaining 34 are a higher expected real rate. Forecasters are not marking up the price outlook so much as the return on capital the economy can sustain.
by:Andrew Cates
|in:Viewpoints
Global| Jul 30 2026Charts of the Week: The Price of an Investment Boom
The Federal Reserve left its policy rate unchanged at the conclusion of last night’s meeting, a decision that had been widely expected — the futures market went in pricing only around a one-in-three chance of a hike — but one that split the committee unusually sharply, with three of its members dissenting in favour of an increase to counter inflation that has now run above target for more than five years (chart 1). Yet whatever the near-term path of official rates, the real cost of capital has already moved decisively. The real ten-year yield has climbed to around its highest in two decades, and it has done so in step with a run of firmer-than-expected economic data (chart 2). Behind that resilience lies an investment cycle that is quietly gathering pace. The July flash surveys show the upturn led, unusually, by manufacturing rather than services (chart 3), and the hard data are beginning to agree, with manufacturing orders across many major economies turning firmly higher (chart 4). Equity markets, for their part, have taken elevated real rates in their stride, the bond–equity relationships that fractured in 2022 having since been restored (chart 5) — the signature of a market that believes it has entered a higher-return, investment-led regime. The optimism is not unqualified. A fresh round of US tariffs and a sharp sell-off in chip stocks, led by South Korea, are reminders that the payoff from all this spending is far from assured. And the boom is colliding with a physical constraint: since the breakdown of the US–Iran understanding, Baltic tanker and gas freight rates have surged even as dry-bulk rates have stayed calm (chart 6), a pointed warning about the security of the world’s energy arteries.
by:Andrew Cates
|in:Economy in Brief
- Global| Jul 28 2026
An Investment Boom in a Constrained World
The world is investing on an extraordinary scale. The question is whether that investment expands productive capacity or merely offsets a more constrained world.
The global economy is entering its strongest investment cycle for a generation. Artificial intelligence, the energy transition, geopolitical fragmentation and higher defence spending are all driving capital expenditure. Unlike previous cycles, however, these forces increasingly compete for the same scarce inputs: energy, grids, critical minerals, water and skilled labour.
by:Andrew Cates
|in:Viewpoints
Global| Jul 23 2026Charts of the Week: The Uneasy Calm
Global financial markets have retained a notably composed tone this week, even as the geopolitical backdrop turned more unsettled once again. News of renewed skirmishes between the United States and Iran reintroduced a risk premium that investors had only lately begun to set aside, yet equities held firm and volatility stayed low. Last week's US inflation and Chinese GDP releases did little to disturb that calm, though the Chinese figures laid bare how soft domestic demand there has become. That composure is an enduring - and notable - feature. Measures of policy uncertainty remain elevated by historical standards, yet market volatility has sunk to the low end of its range — a divergence that says a good deal about the prevailing mood (chart 1). A new risk-appetite gauge from the Federal Reserve Bank of Kansas City, now carried on the Haver platform, points the same way, with investors still firmly disposed to take on risk (chart 2). Beneath the surface, though, evidence of supply-side stress is mounting, with freight rates and suppliers' delivery times pointing to renewed strain (chart 3) — a theme of this week's podcast with the Baltic Exchange. Nor is the pressure confined to manufacturing: firmer grain prices raise the question of whether a developing super El Niño is at work (chart 4). On the demand side, Haver's calculation of China's credit impulse helps to account for the softness in last week's growth figures (chart 5). And beyond the cycle lies the structural, as Britain welcomes a new prime minister in Andy Burnham to a persistent growth problem in which the cost of energy looms large (chart 6).
by:Andrew Cates
|in:Economy in Brief
Global| Jul 09 2026Charts of the Week: Growth Holds Firm
Global markets head into this week’s closing stages digesting a mixed set of signals. Last week's US non-farm payrolls report undershot expectations, adding to questions about the durability of the US labour market even as broader activity data have continued to hold up well. Compounding that picture, news broke today of renewed instability in the Middle East, reintroducing a geopolitical risk premium into markets just as investors had begun to look past it. Global equity markets have nonetheless remained resilient, continuing to track the broadly encouraging tone of incoming activity data (chart 1). That resilience was reinforced by a solid set of global PMIs across most major economies over the past few days (chart 2). Haver's surprise indices tell a similar story of positive growth momentum in the US, but with an important caveat: incoming inflation data have also been surprising to the upside, driven largely by higher oil prices (chart 3). These inflation risks could persist moreover, as global supply chain pressures have picked up in recent months and today's flare-up in the Middle East threatens to add further strain (chart 4). The world economy remains vulnerable to other supply-side shocks too, such as the extreme heat gripping much of Europe this week (chart 5). Still, on the other side of the ledger the enormous scale of investment now flowing into artificial intelligence could be a genuine source of supply-side potential (chart 6).
by:Andrew Cates
|in:Economy in Brief
Global| Jul 02 2026Charts of the Week: Forecasters Hold Firm
Global financial markets have had a more settled feel this week, reflecting the continued unwinding of the geopolitical risk premium that had built up during the worst of the US-Iran conflict. Oil prices have fallen further, equity markets have been broadly supported, and incoming inflation data — notably the euro area’s June flash CPI estimate — have come in below expectations. The US holiday-shortened week ahead, with Independence Day on Friday, is likely to keep volumes thin and activity subdued. The bigger picture, however, remains one of tension between a more benign near-term inflation trajectory and central banks that may not yet be ready to stand down. In the charts below we look first at what the latest Blue Chip Financial Forecasts (BCFF) survey reveals about the expected change in and timing of policy rates across the major economies (charts 1 and 2), then at the divergence between headline and core inflation across the advanced economies (chart 3), and at what euro area consumers are more specifically expecting about inflation in the period ahead (chart 4). We turn next to Japan and the yen’s slide this week to 40-year lows (chart 5), and finally to the BCFF survey’s special questions on artificial intelligence and asset valuations (chart 6).
by:Andrew Cates
|in:Economy in Brief
Global| Jun 25 2026Charts of the Week: Calmer Waters, New Currents
The mood in global financial markets this week is more settled, though “settled” should not be confused with resolved. The US-Iran memorandum of understanding, signed last week, has continued to do its work: oil prices have fallen further, Strait of Hormuz shipping traffic has picked up measurably, and the risk premium that had been embedded in energy markets since the conflict escalated in March is now visibly unwinding. That is a material development for the inflation outlook, and central bankers will be watching carefully. Yet the picture is not without its complications. Technology stocks — the most conspicuous beneficiary of the prevailing low-rate, high-growth narrative — have been subject to renewed jitters this week, as investors grow more attentive to stretched valuations and the implications of a Federal Reserve that, under new chair Kevin Warsh, is no longer signalling the easing cycle previously priced into markets. Against this backdrop, this week’s charts draw on the latest data to assess where the global economic cycle stands. Equity momentum outside the United States has tracked closely with global growth and inflation surprises, a correlation that tells us something important about how activity is being perceived (chart 1). Meanwhile, the breakdown of the previously tight relationship between oil prices and US two-year yields is arguably one of the more telling market signals of recent weeks (chart 2). June’s flash PMI surveys point to easing supply chain stress and softer output price inflation in manufacturing — a finding that chimes naturally with lower crude prices and the resumption of Hormuz flows (chart 3). The Strait of Hormuz itself deserves a closer look: traffic data and the mechanics of the oil price pullback are telling a coherent story that supports the PMI picture (chart 4). South Korea’s trade data, including semiconductors, offer a slightly softer read on global demand momentum at the margin (chart 5). And looming on the horizon, one new risk is drawing the attention of meteorological authorities: a Super El Niño event whose probability has been rising, with potentially significant implications for food commodity prices and Asian agriculture (chart 6).
by:Andrew Cates
|in:Economy in Brief
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