The Bank of Canada’s quarterly surveys show that businesses’ inflation expectations continue to decline, albeit slowly, and point to a growing risk that the economy will fall into recession. Accordingly, we continue to doubt that the Bank will raise …
16th October 2023
September saw sharp drawback in lending The jump in lending in August proved temporary as net lending to commercial property totalled just $13.5bn in September, below the average for 2023 thus far. This took total outstanding real estate debt to $5.5trn. …
Manufacturing losing momentum The surprise fall in manufacturing sales volumes in August reduces the chance of GDP rising by any more than the initial preliminary estimate of a 0.1% m/m gain, and means a second consecutive contraction is still on the …
All else equal, our view that the AI revolution will lead to faster productivity growth in the late-2020s and early 2030s implies that greenhouse gas emissions will be higher during this period than we previously expected. That said, the net impact of AI …
Saudi Arabia’s economy is in a recession and, with oil output cuts extended until the end of this year at least, GDP will contract further. We think that the economy will shrink by 1.3% this year which is towards the bottom of the consensus range and …
The exit poll from Poland’s parliamentary election on Sunday suggests that the incumbent PiS will fall short of forming a majority and that the pro-EU opposition will be able to form a coalition government. This would help to improve relations with the EU …
Perceptions matter at least as much as actual policies in determining fiscal stability. Accordingly, the surge in bond yields over the past month poses the greatest risk to those countries where the government’s commitment to fiscal rectitude over the …
This page has been updated with additional analysis since first publication . Inflation accelerates once again, setting the stage for Central bank hikes Nigeria’s headline inflation rate rose again to an almost-18 year high of 26.7% y/y in September, …
Global bond markets have clawed back some of the wrenching losses of recent weeks, but yields remain far above levels seen over much of the post-global financial crisis period. This shift upwards reflects a painful adjustment from the zero interest-rate …
The job-to-applicant ratio has usually signalled earlier than the Tankan that the labour market has taken a turn for the worse. But despite the recent fall in the number of jobs relative to applicants, we still think that the labour market will soon start …
There are growing indications that household finances are coming under pressure as mortgagors struggle with rising debt-servicing costs. Although households benefit from substantial liquidity buffers, we suspect they won’t be rushing to run those down to …
The surprise attack on Israel by Hamas last weekend upended a lot of geopolitical assumptions, but what will this mean for the economic and markets outlook? Liam Peach , a senior economist on our Macro team, and Chief Commodities Economist Caroline Bain …
13th October 2023
After another topsy-turvy week in financial markets, the dollar appears to be back on the front foot. In part, that probably reflects Thursday’s US CPI print, which came in a touch higher than expected. That led to a rebound in US Treasury yields, which …
Spanish inflation doubled from 1.6% in June to 3.2% in September and is likely to rise to over 4% by the end of the year. However, ECB policymakers won’t be too concerned as the increase is largely due to rising energy inflation while core inflation looks …
Ghana rate cuts more likely as inflation falls Annual inflation in Ghana eased again to 38.1% y/y over September which gives the central bank some leeway to consider cutting rates at its next meeting. The drop in inflation last month was down from 40.1% …
The fall in house prices in September shows just how quickly conditions in the housing market have shifted and the plunge in the sales-to-new listing ratio points to more weakness to come. That is another reason to expect the Bank of Canada to cut …
We don’t expect a rise in earnings expectations to give the S&P 500 much of a near-term boost, but think the picture is more positive further ahead. Although US earnings season is getting under way, corporate profits probably haven’t always been front of …
Cobalt is likely to keep its position as a leading battery metal for years to come, but its high cost compared to alternative metals means that cobalt demand won’t grow as fast as overall battery production. This is a key reason why we think that the …
Malaysia budget to weigh on GDP, add to inflation Malaysia’s budget for 2024, which was unveiled in parliament today, envisages a modest tightening of fiscal policy, with the deficit set to narrow from an estimated 5.0% of GDP this year to 4.3% in 2024. …
It was a mixed week for prices, with energy, agricultural and precious metals outperforming industrial metals. (See Chart 1.) Chart 1: S&P GSCI Sub Indices (3 rd Apr. 2023 = 100) Source: Refinitiv Capital Economics Energy prices rose on the back of the …
Ecuador’s presidential run off Ecuadorians head to the polls on Sunday in a run-off vote for the country’s next president that pits left-wing candidate Luisa González against centre-right businessman Daniel Noboa. Whoever wins will serve the remainder of …
Confidence suffers from renewed inflation concerns The sharp fall in the University of Michigan consumer sentiment index to a five-month low of 63.0 in early October, from 68.1, probably reflects the hit from recent financial market moves, as well as …
We think the macroeconomic environment will continue to play the key role in the outlook for emerging markets (EM) dollar-denominated sovereign bonds this year and next. Despite country-specific risks, we expect the yields of most of those bonds to fall …
We set out our initial thoughts on the potential implications of the conflict between Israel and Hamas earlier this week here . It’s hard to know how things will develop from here, but we think that there are four key points worth making at this stage. …
There appears to be growing support at the Fed for the idea that the recent sell-off in long-term Treasuries reduces the need for further policy rate hikes, but the more persuasive reason for the Fed to pause is that inflation is continuing to ease …
Almost as fast as gilt yields rose (see here ) they have subsided. After surging from 4.68% on 2 nd October to a 21-year high of 5.11% last Friday, the 30-year gilt yield dropped to 4.72% on Thursday, although it has since ticked up to 4.85% on the back …
China imported fewer key commodities in September than in August, but its underlying demand for commodities, especially fossil fuels, remains strong and is only likely to strengthen from here. China’s preliminary trade data, released today , showed m/m …
Economists from our China and financial markets teams held an online briefing about the Q3 economic data release and outlook for the Chinese economy and markets. During this 20-minute session, the team answered client questions as they addressed key …
The latest activity and survey data have provided even more evidence that the resilience in activity in advanced economies over the first half of 2023 is now fading. High interest rates are clearly weighing on credit growth, and a further rise in debt …
Online briefing about the health of China's economy We'll be online on Wednesday shortly after the release of the September activity and spending data and Q3 GDP. Register here to join us. US export controls about to bite harder The US government is on …
The Hamas-Israeli conflict has so far had relatively little impact on oil prices but has pushed up European natural gas prices by nearly 30% this week, to €53 per MWh at the time of writing. There has been a small direct impact on the supply of gas as …
Investment growth may have slowed in Q3 Data released this week showed that growth in industrial output accelerated from 6.0% y/y in July to 10.3% y/y in August, the fastest in more than a year. And in m/m seasonally adjusted terms, output rose from 0.2% …
Industrial rental growth in the Nordics is set to slow in 2024. But a brighter macroeconomic outlook and tight vacancy will help rent growth to outperform the euro-zone. Further ahead, the current high level of online adoption relative to the euro-zone …
Credit growth has stabilised After slowing sharply in Q2, broad credit growth edged up in August and held steady last month. Although a sharp rebound seems unlikely, we do think credit growth could pick up somewhat over the coming quarters, especially if …
Economy probably won’t overheat The IMF this week revised up its forecast for Japan’s 2023 GDP growth from 1.4% to 2.0%, broadly matching our own. With activity rising much faster than its sustainable rate, any remaining spare capacity in the economy has …
Fall in inflation but Riksbank still not done This page has been updated with additional analysis since first publication. The drop in inflation in September was a little smaller than we and the consensus had anticipated and strengthens the case for the …
What to expect from a change of guard The headlines this week have largely been dominated by the last leg of campaigning ahead of New Zealand’s general election on October 14 th . The latest opinion polling suggests that five parties are likely to cross …
This page has been updated with additional analysis since first publication . Export volumes hit fresh high but prices falling China’s export values continued to contract year-on-year in September. But to the extent that foreign demand has cooled …
This page has been updated with additional analysis since first publication . Deflation fears to dissipate further PPI deflation continued to ease in September. CPI inflation edged down, but core inflation remained at a six-month high, with services …
Large-capitalisation (large-cap) stocks in emerging markets (EMs) have markedly underperformed their smaller counterparts this year, sharply contrasting with the relative performance of large- and small-cap stocks in developed markets (DMs). But our view …
The Monetary Authority of Singapore (MAS) kept monetary policy settings unchanged today which was in line with both our and consensus expectations. While another hold is likely in January, further falls in the core inflation rate and weaker growth are …
An increase in lending to other parts of China’s economy has provided a counter-balance to the slump in in credit demand that was triggered by the property crisis, but it is still only a partial one. That’s not the impression given by a chart that has …
12th October 2023
We still think the Fed and investors are too pessimistic about inflation in the US returning to target. We expect a continued fall in both core and headline inflation to push down US Treasury yields over at least the next year or so. CPI data out of the …
Estimates suggest that the term premium of US 10-year Treasuries has bounced back to positive territory. We think that this can be at least partly explained by demand and supply factors. And we suspect that term premia might rise a bit more, even though …
The outbreak of conflict between Hamas and Israel this week has not yet spilled over into the wider region. But the situation is in flux and, if Iran is pulled into direct conflict, the ramifications for the region would be a lot larger. Since we …
Surging interest rates caused mortgage demand to slump in Q3 at the same time as rising defaults led lenders to tighten mortgage credit conditions. Similarly, it became more difficult to secure commercial real estate loans. We expect availability of …
Construction boom helps to offset manufacturing weakness Mexico’s industrial sector posted a modest 0.3% m/m rise in output in August as another jump in construction output more than offset renewed weakness in manufacturing. But more timely indicators …
This page has been updated with additional analysis since first publication. Core inflation to remain on downward trend The 0.3% m/m rise in core consumer prices in September suggests, at face value, that the downward trend in core inflation may be …
