The RBA will leave interest rates unchanged at its upcoming meeting on 10 th December. While the weakness in economic activity points to rate cuts before long, we think the Bank will need to see clearer evidence that the labour market is loosening and …
4th December 2024
This early edition of the Capital Daily outlines our initial thoughts on the market implications of the political drama in Korea. Rarely does a combined sell-off in a country’s stocks, bonds, and currency feel like a relief rally. But the situation in …
Weak activity points to RBA easing policy before long GDP growth remained sluggish in the third quarter, adding to the case for the RBA to start easing policy before long. The 0.3% q/q rise in GDP in the third quarter was a touch weaker than the analyst …
The probable imminent collapse of the French government is not having much impact on bond markets elsewhere in the euro-zone. And we think contagion risks will remain limited, as long as the monetary union itself is not called into question. One of the …
3rd December 2024
While energy market fundamentals point to oil prices falling a bit further and prices of European natural gas and Asian LNG remaining higher than before the Russia-Ukraine war, the uncertain geopolitical backdrop is a major wildcard for energy markets. Of …
President Yoon Suk Yeol’s declaration of martial law – and parliament’s vote to reverse it – has plunged Asia’s fourth largest economy into crisis and triggered turmoil across South Korean financial markets. On 4th December our economists held a special …
The rebound in job openings in October suggests that labour market conditions are stabilising at a healthy level. Meanwhile, despite a small rebound in the private quits rate, it still points to wage growth slowing sharply. The rebound in job openings to …
Our Long Run Returns Monitor provides our updated long-term projected returns for major asset classes. All projections in this publication are as of 29th November 2024. We publish more detailed explanation of our views in our annual Long Run Asset …
The declaration of martial law by Korea’s president is an extraordinary step that seems likely to trigger either the suspension of Constitutional democracy in Korea or the president’s own rapid impeachment and removal. For investors the key question is …
The main presidential candidates and their parties in Ghana’s upcoming election appear to be committed to restoring fiscal discipline and getting inflation under control. That said, the opposition NDC, which currently appears on course to take power, is …
An interactive guide to the fiscal sustainability challenges faced by euro-zone economies. This content was last updated on 20th January 2025. If you have subscriber access to this data, you can download it via the menu options in the top right of …
Tight supply conditions will drive a solid rent outlook for the student housing sector over the next year. But the bigger picture remains one of slowing demand as steady declines in the college-age population and curbs on immigration provide a substantial …
Note: We’ll be discussing the French budget crisis in a Drop-In on Tuesday, 3rd December at 1000 ET/1500 GMT . Click here to register for the 20-minute online briefing. France is unlikely to have a government with a mandate to tighten fiscal policy …
Although the Republicans completed a clean sweep in the recent election, we are sceptical that this opens the door to additional fiscal stimulus. We do expect the original Trump tax cuts, which are due to expire at the end of next year, to be extended. …
Another strong quarter points to larger Selic hike The strong 0.9% q/q expansion in Brazil’s GDP in Q3 will add to the central bank’s concerns that the economy is running too hot. Alongside rising inflation and the sell-off in local financial markets in …
Gulf ending the year on a stronger note November’s batch of PMIs showed an increase all of the Gulf economies, although there remained some underlying signs that non-oil activity is softening. Elsewhere, Egypt’s PMI improved a touch as price pressures …
Surprise contraction, but things not so bad under the hood South Africa’s economy recorded a surprise contraction of 0.3% q/q in Q3, but that was largely due to a steep decline in agricultural output. The rest of the economy held up much better and we …
This page has been updated since publication with additional analysis. Rise in inflation will prove temporary The uptick in Swiss inflation in November is likely to prove short-lived and should not prevent the SNB from cutting interest rates again in …
Rate cut in December may be jumping the gun The smaller-than-expected decline in Turkish inflation in November, to 47.1% y/y, suggests to us that a monetary easing cycle probably won’t start later this month as many analysts seem to be expecting. We …
Overview – We now expect inflation excluding fresh food and energy to remain above the Bank of Japan’s target for most of next year as the yen remains weak for longer and the upcoming spring wage negotiations result in another sizeable pay hike. …
The French government is on the brink of collapse, the country’s fiscal situation continues to deteriorate and its bonds are trading like their Greek counterparts. Is this the next euro-zone debt crisis? Andrew Kenningham, our Chief Europe Economist, and …
2nd December 2024
What’s the outlook for struggling German auto manufacturers? How big a threat do Donald Trump and Chinese imports present? What are the macroeconomic implications of this industry’s travails? Chief Europe Economist Andrew Kenningham held an online …
Our US Housing Market Chart Pack has been updated with the latest data and our analysis of recent developments. Conditions for would-be homebuyers and sellers will not improve much in the near term, with mortgage rates set to remain around 7% through the …
President-elect Trump’s latest tariff threat, this time against the “BRICS” economies, is another early taste of his combative approach to trade policy and its potential impact on financial markets. The chance of a BRICS currency (or another alternative) …
The latest PMIs show that while China’s manufacturing sector is benefiting from a fiscal boost, industry in most of the rest of the world continues to struggle. With demand weak and little disruption on the supply side, indicators of goods price pressures …
The pick up in the aggregate EM manufacturing PMI in November was largely driven by China. Elsewhere, manufacturing activity looks as though it will remain relatively soft into next year. The surveys suggest that goods price pressures picked up last …
Despite the recent upward revisions to our forecasts for the US dollar and Treasury yields, we still think the gold price will rise to $2,750 by end-2025. This reflects our view that stronger gold demand from China and broader concerns about fiscal …
This page has been updated with additional analysis since first publication. Post-disruption rebound can’t hide weakness The rebound in the ISM manufacturing index in November was as expected following recent hurricanes and the end of the Boeing strike, …
It’s the season for the usual avalanche of reports looking ahead to the coming twelve months. Over the coming days and weeks we will publish our macro and market Outlook reports, which will provide in-depth analysis and comprehensive forecasts across our …
Unemployment rate set to rise next year With the unemployment rate unchanged at 6.3% in October, the euro-zone labour market appears to be holding up reasonably well. However, this looks set to change in the coming months as the outlook for economic …
Central Europe continues to struggle The PMIs fell deeper into contractionary territory in Poland and Czechia last month, adding to the disappointing run of activity data out of Central Europe. In contrast, the PMIs rose in Turkey and Russia. And an …
Centre-left comes out on top, but fragmented coalition likely The centre-left Social Democrats (PSD) – the largest party in Romania’s current coalition – look set to win the most votes in the parliamentary election which took place on Sunday, but strong …
We now think the 10-year JGB yield will rise further, the yen will make more ground against the US dollar, and Japan’s equities will struggle to make much headway (in yen terms). Inflation in Japan looked, only a couple of months ago, to be firmly on the …
This page has been updated with additional analysis since first publication. Shrugging off higher mortgage rates November’s surprisingly large rise in the Nationwide house price index suggests the housing market is picking up momentum despite recent rises …
The November PMIs for Asia remained weak and are consistent with our expectation for manufacturing activity in the region to remain subdued in the near term. The data also showed a modest pick-up in price pressures. But with headline inflation now below …
This report was first published on the 2 nd December covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on the 4 th December. Growth continues to pick up, led by manufacturing The …
Although Australian house prices edged up a notch in November, we remain sceptical about prospects for a second wind in the housing cycle. Given that the RBA is unlikely to provide interest-rate relief until mid-2025 at the earliest, we expect the …
Consumption growth may pick up further in Q4 Retail sales rose rather strongly in October and suggest that real consumption growth will continue to accelerate this quarter. The 0.6% m/m rise in retail sales values in October followed a muted 0.1% m/m rise …
The US dollar has finally hit a speedbump this week, with the DXY index registering its first weekly drop since late September. Given the continued resilience of the US economy – we expect next week’s US ISM surveys and non-farm payrolls to have rebounded …
29th November 2024
CBN makes case inflation close to peaking Central Bank of Nigeria Governor Yemi Cardoso set out the case at this week’s MPC meeting for inflation to slow down, suggesting that officials are eyeing the end of the tightening cycle. The CBN’s …
It was déjà vu all over again this week after a social media post from Donald Trump rattled markets. Group Chief Economist Neil Shearing is on the latest episode of The Weekly Briefing from Capital Economics to discuss how seriously we should treat the …
Activity data highlight need for further support We were one of the few analysts to correctly predict this week’s rate cut by the Bank of Korea , and we think it is only a matter of time before the Bank cuts again. The central bank’s statement and the …
US President-elect Donald Trump’s pledge this week to levy a 25% tariff on all products imported from Canada is clearly more of a bargaining tool than a genuine threat. However, it is now apparent that the USMCA will not spare Canada from Trump’s wrath. …
Mexico in Trump’s crosshairs President-elect Donald Trump fired the opening salvo in the next round of the trade war this week, threatening to impose a 25% tariff on all imports from Mexico (as well as from Canada, plus a separate tariff on China) on day …
China Chart Pack (Nov. 24) …
We have been forecasting the ECB to cut interest rates by 50bp in December for some time, and we think the case for such a move remains strong. The latest surveys suggest that the economy is hardly growing. November’s Composite PMI points to the economy …
In an economy where the government is boosting its spending and investment, we need to be extra cautious when interpreting the activity data. This is because there are lots of frequent indicators on private sector activity, but fewer indicators on public …
50bp rate cut hopes not dead yet The 1.0% annualised gain in third-quarter GDP was not as bad as it looks, with most of the weakness due to a big drag from the volatile inventories component and the Bank of Canada likely to be encouraged by the sharp …
The ruble’s rollercoaster ride Donald Trump’s election victory has made some form of an end to the war in Ukraine more likely. (For more, see here .) His appointment this week of Keith Kellogg as his Russia-Ukraine envoy also points in this direction. Mr. …
