Inflation surge puts another large hike on the table The jump in Turkish inflation to a much stronger-than-expected 58.9% y/y last month, coming shortly after bumper Q2 GDP figures, means the central bank (CBRT) is likely to follow up last month’s 750bp …
4th September 2023
Overview – We no longer expect Japan’s economy to enter a recession. However, with real household incomes set to fall until the end of this year, domestic demand growth will remain sluggish. Accordingly, we expect GDP growth to slow from 2.3% this year to …
The news that the UK economy may now be 1.5% bigger than its Q4 2019 pre-pandemic size, rather than 0.2% smaller, suggests the economy has been much stronger than we previously thought. But with the UK still likely to be suffering from a labour supply …
1st September 2023
A run of soft US labour market data has left the dollar on track to end the week slightly lower against most major currencies, threatening to break the DXY index’s six-week winning streak despite a strong rebound in the wake of the ISM manufacturing …
Despite today’s rebound, the general fall in Treasury yields over the past week against a backdrop of mixed economic data suggests investors could be starting to come round to our view that price pressures will continue to ease almost irrespective of how …
Although a rise in Chinese manufacturing output meant that the decline in global manufacturing activity eased slightly in August, the outlook for industry in advanced economies in particular remains weak. Meanwhile, although the PMIs also pointed to a …
Bank to pause amid rising recession risks The surprise second-quarter contraction in GDP was partly due to the wildfires but, even without that damage, growth would have been very weak. With the August CFIB Business Barometer showing further concerning …
EM industry strengthens, but export demand weak The manufacturing PMIs for August pointed to pick-ups in activity in some of the major EMs. But external demand remains soft, which continues to weigh heavily on some of the more export-oriented economies in …
IMF losing its patience with Argentina The IMF’s fifth and sixth reviews (which were combined) of Argentina’s $44bn programme out late last Friday make for pretty depressing reading. The Fund slashed its 2023 GDP growth forecast to -2.5% (from +2%) and …
As summer holidays draw to a close attention is quickly turning to September’s big central bank decisions. Group Chief Economist Neil Shearing and the team have been sifting through weeks of data from the US, euro-zone and UK to assess what the Fed, ECB …
Most commodity prices rose this week (see Chart 1) after data showed that US labour market conditions are easing (see here and here ), lowering expectations for US interest rates and weakening the dollar. Chart 1: S&P GSCI Sub-Indices (2 nd Jan. 2023 = …
Rising gas prices doesn’t mean energy crisis is back Wholesale European natural gas prices jumped more than 20% in the early part of this week and have been highly volatile recently, but this doesn’t mean the energy crisis in the region is coming back to …
This page has been updated with additional analysis since first publication. Still consistent with weak output growth and slower inflation The further rise in the ISM manufacturing index to a six-month high of 47.6 in August, from 46.4, is another sign …
This week brought more data showing that real economic activity is holding up surprisingly well given surging interest rates but, in part due to the easing in labour market conditions, price pressures are nevertheless fading. US consumer remains the …
Coup contagion? The military coup in Gabon this week, coming so shortly after a coup in Niger, has raised further concerns about political instability and institutional frailty in the region. Soldiers removed Gabon’s president, Ali Bongo, from power on …
This page has been updated with additional analysis since first publication. Economy may already be in recession The surprise contraction in second-quarter GDP leaves little doubt that the Bank of Canada will keep interest rates unchanged next week. With …
This week the Bank of England’s Chief Economist, Huw Pill, indicated that while the Bank still had to “see the job through” and remain vigilant with “stubbornly high inflation”, he didn’t think interest rates need to rise much further from 5.25% now. But …
This page has been updated with additional analysis since first publication. Labour market strength fading rapidly The 187,000 gain in non-farm payrolls, jump in the unemployment rate and slowdown in wage growth in August all add to the evidence that …
Core inflation heading down August’s inflation data, published this week, increase our confidence that the core rate has passed its peak. Core goods inflation is clearly on a downward trend and has much further to fall as lower energy prices and improved …
This page has been updated with additional analysis since first publication . A strong H1, but slower growth ahead The much faster-than-expected Brazilian Q2 GDP growth figure of 0.9% q/q suggests that the economy is in stronger health than many – …
The cyclically-sensitive antipodean currencies have had a tough year so far, and a fair bit of bad news already appears priced in to both the aussie and the kiwi. Nonetheless, we don’t think their recent rebound will prove the start of a sustained …
While doom and gloom builds around China’s growth, PMIs for August provided some encouragement this week, even if they didn’t paint a picture of booming commodities demand. They suggest infrastructure spending has begun to support metals demand and that …
A poor start to Q3 This week’s data dump from Korea suggests the economy weakened at the start of Q3, increasing the chances that the BoK will cut interest rates soon. Figures published yesterday showed that industrial production in July fell by 2.0% in …
Vegetable price inflation still elevated The surge in tomato prices since early July has gone into reverse over the past couple of weeks and prices are now close to their levels from June. (See Chart 1.) This has been mostly due to improvements in supply …
This page has been updated with additional analysis since first publication . PMI overall improves but still points to weak growth South Africa’s manufacturing PMI strengthened in August, reversing the declines seen in recent months as loadshedding became …
This page has been updated with additional analysis since first publication. Weak PMIs in CEE, but further evidence of Russia overheating The manufacturing PMIs for August suggest that industrial sectors in Poland, Czechia and Turkey remained in the …
This publication has been updated with additional analysis. Inflation unchanged, set to stay below 2% Switzerland’s headline inflation rate was unchanged in August as a fall in core inflation was offset by the impact of rising fuel prices. This is the …
The start of a new leg down in prices The large monthly fall in house prices in August confirmed that the further leg down in house prices that we have been forecasting has begun to materialise. With mortgage rates likely to remain around current levels …
This page has been updated with additional analysis since first publication. Manufacturing PMI defying gravity, again India’s manufacturing PMI is again defying gravity, recording one of its highest readings in the past 13 years in August. It’s clear that …
Stimulus efforts are finally gaining momentum. Yesterday, regulators announced measures to support households and shore up the property sector, including looser downpayment requirements and reductions to existing mortgage rates. And today, the state banks …
No relief in sight for manufacturing in Asia Manufacturing PMIs across most of Emerging Asia stood well inside contractionary territory in August. Weak foreign goods demand, elevated interest rates at home and bloated inventory levels suggest …
Housing recovery remains in high gear Australian house prices rose at a blistering pace in August, as demand continued to outstrip supply. Although the property market is likely to remain tight in the near term, we think house price growth will moderate …
The dollar has rebounded in August but remains broadly unchanged on the year so far. We continue to think that it (and the yen) will rally over the second half of the year as the long-anticipated recessions finally take hold in the US and other advanced …
31st August 2023
Military coups are sweeping Francophone Africa, Argentina’s wildcard presidential candidate is suddenly an election favourite and Vladimir Putin’s war is eating away at Russian macro stability. EM investors are well attuned to political risk – but has it …
We think China’s AI-related stocks may outperform their US counterparts over the rest of this year. But their longer-term prospects look less upbeat, to us. AI-related stocks in China were boosted overnight after a number of China-based firms launched …
Although we’re growing less convinced by the idea that the US economy will tip into recession over the coming quarters, we still expect disappointing growth across advanced economies to weigh on risk appetite over the rest of this year. We think that may …
We think that the silver price will fall over the next few months. But as macroeconomic and financial factors switch from a drag to a boost to demand, and as photovoltaic demand gathers pace, the price should recover in 2024. While the silver price has …
Growth in most advanced economies will disappoint later this year, putting pressure on “risky” assets and favouring “safe” ones. Developed markets (DM) government bond yields will therefore decrease further, helped by central banks shifting towards easing …
Consumption boosted by heatwave Real consumption increased by a bigger than expected 0.6% m/m in July, which will result in another round of upward revisions to third-quarter GDP growth. Our own forecast is now up to 2.3%. But the strength in July is …
This page has been updated with additional analysis since first publication. Resilient economy likely to cool a touch The GDP data for Q2 (Q1 of FY23/24) confirm a resilient first half of the year for India’s economy in the face of the RBI’s policy …
Fixed investment has been the weak spot in Colombia’s strong post-pandemic recovery and it is likely to remain subdued over the next couple of years due to a combination of the fragile political backdrop, lower oil prices and weakness in the housing …
The repayment of ECB TLTROs by banks has gone smoothly so far and we expect the rest of the TLTROs to be repaid by the end of 2024 without significantly affecting financial conditions or interest rates. That said, the replacement of TLTROs with short-term …
Turkey’s policy shift has ticked a lot of the right boxes so far and the central bank’s large rate hike this month will go a long way to rebuilding confidence among investors. But there are still question marks about how much tightening will be delivered …
Not only did global goods trade fall in June, but timelier trade and survey data for July and August point to further declines. Meanwhile, with the lagged impact of high interest rates likely to weigh more heavily on demand for certain goods, it could be …
While the macro backdrop was broadly unchanged, rents were stronger and yields were higher than expected in Q2, forcing us to re-examine our 2023 real estate view. As a result, we have edged down our end-year all-property view for capital values. This now …
What’s driving the slide in SAMA’s assets? The drop in the Saudi Central Bank’s (SAMA) foreign assets to a 14-year low in July caused some concern this week, but we suspect this reflects funds being recycled to the Public Investment Fund. Figures …
While the Women’s World Cup ultimately ended in disappointment for English supporters, it’s somewhat fitting that climate policy is increasingly being made into a political football. The failure in the UK and elsewhere to address climate policy’s inherent …
We think there is ample scope for the US stock market to perform strongly in 2024 and 2025. Admittedly, this year’s rally in the S&P 500 hasn’t had much to do with expectations of faster growth in earnings per share (EPS). Instead, it seems mainly to …
China's reopening recovery has fizzled out and the economy is now at risk of a downward spiral. We think policymakers will provide enough stimulus to avoid this and deliver a modest reacceleration in growth over the coming quarters. But most of the …
