Import volumes weakest since 2020 We’ve been arguing that Japan is not in recession even though GDP has fallen for two consecutive quarters. However, February’s soft flash PMI and the large fall in imports in January hardly instil confidence in the …
23rd February 2024
RBA won't hike rates again Flash PMI data released yesterday showed that Australia’s composite output index jumped to a 10-month high of 51.8 in February. The index is now consistent with annual real GDP growth of about 2.0% in Q1 (see Chart 1), which …
Februarys’ flash PMI surveys suggest that economic activity improved in Europe at the start of this year. But services prices pressures remained elevated, especially in the UK and euro-zone, meaning that the ECB and Bank of England won’t be in a rush to …
22nd February 2024
The recent back-up in long-term Treasury yields, reflecting concerns that inflation isn’t coming down fast enough to prompt the Fed to cut rates in the near future, raises the question of how much worse things might get for bonds if Donald Trump is …
The latest monthly activity data suggest that Mexico and Brazil ended 2023 on a weak note, a trend we expect to continue this year. But we think the Andean economies are on track to stage a recovery. The big falls in inflation in the region are behind us …
All-property total returns will turn positive in 2024 but we don’t think the recovery will be much to write home about. Our UK Commercial Property team explained why in this special online briefing and highlighted key takeaways from their recent quarterly …
Lower mortgage rates have the desired effect on sales, but it won’t last The sharp fall in mortgage rates at the end of last year was the catalyst for existing home sales rising in January. But borrowing costs have risen again in recent weeks, which in …
India’s economy performed exceptionally well last year and the latest data suggest that it has made a flying start to 2024 too. While inflation eased last month, we think it will be a slow grind back to the 4% midpoint of the RBI’s 2-6% target range. That …
The stalling in services disinflation in recent months is largely due to technical factors and one-offs. If services prices continue to increase at their recent pace in month-on-month terms, the year-on-year rate will fall a little further in the coming …
We think victory for Donald Trump in this year’s US presidential election would lead to higher Treasury yields than if incumbent Joe Biden (or another candidate) won. In our view, another Trump term would also be a headwind for equities – especially …
Carbon price not out of the woods yet …
This report is the third of a three-part mini-series that establishes a framework for assessing the outlook for the EU carbon price. It takes an in-depth look at the various factors that typically drive the EU carbon price in the short term. While supply …
This report is the second of a three-part mini-series that establishes a framework for assessing the outlook for the EU carbon price. It sets out our approach for modelling the fundamental price of an EU carbon permit [1] over the rest of this decade. In …
This report is the first of a three-part mini-series that establishes a framework for assessing the outlook for the EU carbon price. It starts by explaining what an emissions trading scheme (ETS) is and how the ETS has evolved since its introduction in …
Set for a weaker first quarter The strong rise in December means that retail sales volumes rose by close to 5% annualised last quarter, supporting the preliminary estimate that GDP growth turned positive again. With sales volumes broadly unchanged in …
Tunisia: threat of messy crisis and default builds Tunisia managed to meet a Eurobond repayment this week but only by draining its already-low FX reserves. In the meantime, steps were also taken towards deficit monetisation, taking Tunisia further down …
Growth pick up is likely to be short-lived Nigeria’s GDP growth rebounded to 3.5% y/y in Q4 but we doubt that this strength will last. Tighter monetary policy, coming alongside the pernicious effects of further weakness in the naira and ongoing struggles …
Inflation drops back, March rate cut in play The drop back in Mexico’s headline inflation rate to 4.5% y/y in the first half of February leaves Banxico on course to begin an easing cycle at March’s Board meeting. That said, the rise in core services …
New governor committed to the tight policy stance The hawkish statement accompanying the Turkish central bank’s decision to leave interest rates unchanged at 45.00% today supports our view that a shift to monetary easing remains some way off and we still …
Carbon prices have been falling on the back of lower natural gas prices and reduced European industrial activity. There’s a case for recovery, driven by a combination of macro, market and regulatory factors – but when and how strong will it be? To mark …
Now that mortgage rates have stopped falling, can the recovery in house prices continue? What will that mean for transaction levels and mortgage lending? And following the record increase in rents last year, can they continue to surge in 2024? Our UK …
This page has been updated with additional analysis since first publication. Lingering price pressures may continue to concern the BoE The small rise in the composite activity PMI, from 52.9 in January to 53.3 in February (CE forecast 53.0, consensus …
Domestic demand to drive the recovery Poland’s activity data for January suggest that the reacceleration in wage growth at the start of this year supported domestic demand, while the export-orientated industrial sector struggled. We think that a further …
PMIs point to stagnation, stubborn price pressures The flash PMIs for February suggest that the economy is still struggling and that price pressures are, if anything, intensifying. This does not dramatically change the picture for the ECB, but it does …
The Bank of Korea left its policy rate on hold today (at 3.5%) and attempted to push back against expectations for an early rate cut. However, with inflation likely to be back to target soon and domestic demand struggling, we expect easing to begin in …
This page has been updated with additional analysis since first publication. Manufacturing and services activity likely to remain robust The flash composite PMI reading for February suggests that the economy continues to perform exceptionally well. …
The Bank of Japan has succeeded in creating tight labour market conditions through ultra-loose monetary policy and is now reaping the benefits in the form of stronger wage growth. The upshot is that we expect the Bank to end negative interest rates at its …
Central banks in both Australia and New Zealand are likely to remain in “wait and watch” mode in the near term, given lingering risks to the inflation outlook. However, we think concerns about inflation persistence are overdone. Goods inflation is already …
On hold again, easing coming soon The Bank of Korea (BoK) kept its main policy rate unchanged today (at 3.5%), but with inflation cooling and growth set to struggle, we don’t think cuts are far away. The decision was correctly predicted by all 38 …
This page has been updated with additional analysis since first publication. The recovery in activity this quarter will be modest February’s PMI readings saw a drop almost across the board with the composite PMI, manufacturing PMI, services PMI and new …
Minutes lean a little hawkish, but don’t rule out May rate cut The minutes of the Fed’s late January policy meeting included support for both hawks and doves although, somewhat disappointingly, there was no attempt to quantify what gaining “greater …
21st February 2024
So far this year, the US dollar has moved in tandem with the relative performance of US equities. While that may continue over short time horizons, we doubt the rally in US equities we anticipate over the next couple of years will be a significant …
How strong was Chinese commodities demand at the start of 2024? What do official growth and spending targets signal about demand over the coming year? Where will demand be strongest in commodities markets this year? Economists from our Commodities and …
The economy continues to appear impervious to higher interest rates and, although we expect growth to slow over the first half of this year, that slowdown is likely to be modest. But we don’t expect continued economic resilience to prevent inflation from …
Almost all major emerging market (EM) currencies have fallen against the US dollar so far this year, and we think they will remain under pressure until interest rate expectations in the US shift lower again. EM currencies have been no exception to the …
The fiscal restraint shown by South Africa’s finance minister in today’s Budget was received positively in local financial markets, but the reality is that the government will struggle to meet its goals (indeed, it’s already doing so). And pressure on the …
An AI productivity boom. A Chinese structural slowdown. Aging workforces. In the coming decades, the global economy will be shaped by forces that will dictate which countries will make strides and which will stumble. Our Long Run Economic Outlook presents …
The S&P Global PMI surveys have not been fully reliable guides to activity in major advanced economies over the past few years. But their relationship with GDP outside the US is still fairly strong and the detail in the surveys offers useful information …
Europe Commercial Property Valuation Monitor (Q1 2024) …
The outcome of Russia’s presidential election is a forgone conclusion. But there are big questions about what will happen in Vladimir Putin’s fifth term to the course of the war in Ukraine, to Russia’s commodity exports and to its economy. Economists from …
Rise in core inflation will give cause for concern to the SARB South Africa’s headline inflation rate picked up to 5.3% y/y in January and the rise in core inflation is likely to spook an already-hawkish SARB, possibly pushing the start of an easing cycle …
Bank Indonesia left its policy rate on hold at 6.00% at its meeting today, and once again reiterated its plans to start loosening policy later in the year. We expect the central bank to start cutting rates in Q2. Today’s decision was correctly predicted …
This page has been updated with additional analysis since first publication. Chancellor won’t have huge amounts of cash to splash We will be discussing what the policies announced in the Budget mean for the economy and the financial markets in a 20-minute …
This page has been updated with additional analysis since first publication. Wage pressures will gradually ease over 2024 The pickup in wage growth in Q4 was driven by larger pay packets for public-sector employees. By contrast, private-sector wage growth …
This page has been updated with additional analysis since first publication. Export growth will still drive GDP growth this year The trade balance turned positive in January, mainly a result of a large fall in imports. Net exports contributed roughly half …
Unlike most bubbles, this one hasn’t been accompanied, at least so far, by obvious signs of high and rising leverage. On the other hand, the share of funds invested in ‘passive’ products is now much higher than in prior bubbles. This Update considers how …
20th February 2024
EM sovereigns have issued a record amount of FX debt at the start of this year, capitalising on a window created by the decline in US Treasury yields since October. The issuance has been concentrated among highly rated sovereigns and borrowing does not …
We will be discussing what the policies announced in the Budget mean for the economy and the financial markets in a 20-minute online briefing shortly after the Budget at 3pm GMT on Wednesday 6 th March. (Register here .) Using most of the fiscal headroom …
