After a stellar 2024, we expect another strong year for US equities in 2025, on the back of continued enthusiasm about AI and US exceptionalism. Meanwhile, we think equities elsewhere will generally fare poorly, owing to another trade war. The S&P 500 has …
2nd January 2025
2024 was another difficult year for commercial real estate. Although the sector appears to have fared better than we expected, our key calls were broadly right in terms of direction and winners and losers. This time last year we outlined five key calls …
We forecast a 140,000 gain in non-farm payrolls in December. Meanwhile, we expect the unemployment rate and average hourly earnings growth to be unchanged, at 4.2% and 4.0% respectively. Payroll growth to normalise It has been a volatile couple of months, …
The termination of European imports of pipeline natural gas from Russia via Ukraine will only increase the EU’s dependence on imports of LNG and ensure that energy prices there remain much higher than in the US. The latest rise in EU natural gas prices …
This page has been updated with additional analysis since first publication. Strong end to 2024 and outlook for 2025 better than most expect December’s better-than-expected 0.7% m/m increase in Nationwide house prices means that prices continued to gather …
The December PMIs for Asia were a mixed bag, but we continue to expect manufacturing activity and GDP growth in the region to remain subdued in the near term. With growth set to struggle and inflation below target in most countries, we think central banks …
There was little festive cheer in Australia’s housing market last month, with house prices stagnating across the country’s eight capital cities. Given our view that the RBA has only limited room to cut interest rates over the coming year, prospects for a …
Our China Activity Proxy suggests that activity growth slowed in November. That was partly driven by a slowdown in fiscal support, reflected in weaker services activity in particular. But industrial activity also slowed on the back of weakening exports. …
31st December 2024
Non-manufacturing sector recovers strongly This report was first published on the 31 st December covering the official PMIs. We added commentary on the Caixin manufacturing PMI on 2 nd January and the Caixin services and composite PMIs on 6 th January. …
Asia Chart Pack (December 2024) …
30th December 2024
Korea’s political crisis deepened today after parliament voted to impeach acting president, Han Duck-soo, just two weeks after President Yoon Suk Yeol was himself impeached following his shock declaration of martial law. This Update discusses the …
27th December 2024
Bank unlikely to cut rates before May The minutes of the RBA’s December meeting struck a slightly dovish tone. However, with the labour market still firing on all cylinders, we doubt the Board will risk loosening policy prematurely. Accordingly, we still …
24th December 2024
The latest FOMC meeting suggests the Fed already has its eye on President-elect Donald Trump’s inflationary policy changes. We have therefore revised up our forecast for the terminal fed funds target range, to between 3.75% and 4.00%, with one 25bp cut in …
23rd December 2024
Our apartment metro forecasts continue to show significant variation between metros, even within regions. For example, while we expect continued strong demand growth in the South – especially in Austin, Miami and Dallas – we also expect high volumes of …
Green shoots emerging The stronger-than-expected increase in GDP in October and upward revisions to the prior two months leaves fourth-quarter growth on track to accelerate to 2% annualised, raising the chance of the Bank of Canada pausing at its next …
Fall in inflation paves the way for further easing The fall in Mexican inflation in the first half of December, to 4.4% y/y, gives Banxico room to continue to ease monetary policy. But we expect Banxico to continue to cut in 25bp steps, rather than step …
Data releases and a slew of central bank meetings have made for a busy end to the year. Our latest monetary policy analysis is listed here , and you can explore and download our interest rate forecasts here and listen to our Drop-In (our short-form online …
This page has been updated with additional analysis since first publication. Economy is going nowhere, although households in a decent position The downward revision to Q3 GDP from +0.1% q/q to 0.0% (consensus and CE 0.1%) isn’t quite as bad as it looks …
The FOMC’s hawkish surprise earlier this week has allowed the dollar to break through the top of its post-2022 range, putting it firmly on the front foot going into 2025. (See Chart 1.) With the BoJ and the BoE both striking a more dovish tone, as most …
20th December 2024
W e are sticking to our forecast that the S&P 500 will end next year at 7,000 , despite its slump since this week’s FOMC meeting. That’s even though we think Fed policy will be a bit less accommodative than we had previously projected , and the risk of a …
Earlier this week we published our US Outlook . We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy. Assuming that Trump introduces tariffs and immigration curbs via executive action by the middle …
Is Putin moving closer to a compromise? A lot of headlines from President Putin’s annual year-end press conference have focused on suggestions that he’s willing to make compromises to end the war in Ukraine. But it also remains clear that the two sides …
Frosty atmosphere at the top Forty years on from his father famously resigning as Prime Minister following a solo walk through an Ottawa snowstorm, reports suggest Justin Trudeau is mulling the same decision after a tumultuous week within government. The …
Economies in Eastern Europe are struggling heading into 2025, and policymakers have limited scope to provide support. We think that stubborn inflation pressures and currency weakness will mean that interest rates are cut by less than other analysts …
Anatomy of a (self-inflicted) crisis Brazil this week was on the precipice of a crisis – if not in one already. The real continued to tumble, hitting a record low of 6.3/$ on Wednesday – down around 10% against the dollar since late October. 10-year local …
A look back at 2024 reveals that some of our forecasts were good and some were off. We were right to forecast this time last year that Bank Rate would be cut only gradually, from the peak of 5.25% to 4.75%. (See here .) That turned out to be closer than …
Consumption losing momentum again Retail sales volumes were unchanged in October, bringing a run of strong consecutive monthly gains to an end. Moreover, the preliminary estimate that sales values were unchanged in November too suggests this may be the …
Trump’s strange threat President-elect Trump’s warning to the EU to “…make up [its] tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!” will not cause sleepless nights in …
Real economy still strong; as price pressures ease again The 0.11% m/m increase in core PCE prices in November was the smallest gain in six months, although it follows on the heels of two above-target ~0.25% gains in the preceding two months. That …
Nigeria: more rate hikes not a done deal Nigeria’s headline inflation rate crept up further in November, but we’re not convinced that this will prompt the central bank to deliver more rate hikes. Figures released on Monday showed that Nigeria’s headline …
Markets don’t believe easing will deliver China’s central bank is trapped between the leadership’s incompatible desires to ramp-up monetary support for the economy, while keeping the currency stable and at the same time sending a message that its policy …
Plus, a dramatic plunge in the value of Brazil’s real shows how far investors have fallen out with Lula’s spendthrift administration. In an exclusive clip from our client briefing on Brazil’s crisis, William Jackson, Jason Tuvey and Jonas Goltermann …
Germany took a further step towards early elections this week as Chancellor Olaf Scholz intentionally lost a confidence vote in parliament as expected. Most political parties also published their manifestos. The main economic proposals of the CDU , which …
China’s exports of the “New Three” held up in November, although this was solely due to the strength of lithium-ion battery exports to the US as firms prepare for the imposition of tariffs. Looking ahead, alongside gains in competitiveness, tariff …
A rare dovish surprise from the CBR The unexpected decision by Russia’s central bank to leave interest rates on hold at 21.00% today, rather than hike further, sparks a lot of questions about the central bank’s reaction function – and whether it may be …
When matters less than how far Governor Ueda delivered two messages in the press conference after yesterday’s policy meeting : first, the Bank of Japan thinks that policy normalisation is still on track and it intends to raise rates further; second, the …
RBA shake up The week began with Australian Treasurer Jim Chalmers announcing two new picks for the RBA’s monetary policy committee. To recap, in late November, parliament approved an overhaul of the RBA, in line with the recommendations of a review …
Dovish BoK minutes point to further rate cuts This week’s publication of the minutes from the Bank of Korea’s November meeting , at which it cut rates for a second month in a row, confirmed that inflation concerns have now largely subsided and that the …
Better data at the end of the year India’s economy is ending 2024 looking a little healthier than it had been. The flash editions of the manufacturing and the services PMIs both rose in the December readings that were published this week. (See Chart 1.) …
This page has been updated with additional analysis since first publication. Little festive cheer for retailers The 0.2% m/m rebound in retail sales volumes in November was slightly worse than expected (consensus +0.5% m/m) and leaves sales on course to …
This page has been updated with additional analysis since first publication. Some good news, but extra revenue-raising measures may still be required Christmas has come early for the Chancellor with borrowing undershooting expectations in November. But …
We expect there will continue to be major divergence between the winning and losing metros. We think the major markets and tech-centric western markets will continue to fare poorly thanks to low office attendance rates and relatively weak office job …
19th December 2024
2025 is promising to be an eventful one for Europe’s economies, with Germans preparing to head to the polls, France preparing for the next lurches in its political/debt crisis, and Donald Trump preparing to reoccupy the White House. Find out what this …
Banxico cuts, but pace of easing unlikely to be stepped up Mexico’s central bank unanimously decided to deliver another 25bp interest rate cut, to 10.00%, at today’s meeting and the statement flagged that the easing cycle will continue in the coming …
Home sales finally gain some momentum The increase in existing home sales in November, despite rising mortgage rates and weakening mortgage applications the month before, points to stronger demand from cash buyers, possibly driven by investors as election …
Overview – We expect the incoming Trump administration’s policies to have a mildly stagflationary impact on the economy. Assuming that Trump introduces tariffs and immigration curbs via executive action by the middle of next year, we would expect GDP …
Saudi inflation to fall back over 2025 Saudi inflation rose further in November but there were tentative signs that some of the recent drivers of higher price pressures are fading and we expect the headline rate to drop back towards 1% by end-2025. The …
Tab le of Key Forecasts Overview – Headwinds to growth will remain strong in 2025 and our forecasts lie below the consensus. While more protectionist US trade policy will hit China and Mexico, the impact for most is likely to be limited. Currencies will …
While the Bank of England left interest rates at 4.75% today, it struck a slightly more dovish tone. This supports our view that the next 25 basis points (bps) rate cut will come in February and that the Bank will cut rates further and faster than …
