Run of stronger US exports has further to go - BAML

FXStreet (Bali) - Gustavo Reis, Global Economist at BAML, thinks that the recent run of stronger export data in the US has further to go.

Key Quotes

"US economic growth is reviving in 2Q, and so are global exports. After contracting in 1Q, global trade volumes seem to be picking up due to a brightening export momentum in China and other key supply-chain economies (Chart 1). This is good news for emerging markets, which need the cushion of improved trade balances as global rates march higher."

"But, while the trade pickup is coming into view, there is uncertainty about the sensitivity of EM exports to US growth. On the one hand, the US is no longer the locomotive of yesteryear."

"China has turned into an alternative final demand pole, to which Asian economies increasingly gravitate. There is also concern that the elasticity of US imports to domestic demand might have diminished due to onshoring and changes in consumer patterns."

"Testing the pulling power of the US economy, however, we find that the country's growth impulse remains significant. This suggests that the recent run of stronger export data has further to go."