Having fallen steadily for much of the last year, European natural gas prices surged last week. The catalyst was constrained supply. Given seasonally high stocks and subdued demand, we are not worried yet about another price spike. But Europe has to avoid …
12th June 2023
The suspension and potential removal of Godwin Emefiele as Nigeria’s central bank governor raises hopes that there will be a shift away from the current unorthodox and interventionist monetary and exchange rate policies. A large devaluation of the naira …
Harry Truman famously asked aides to find him a one-handed economist because all of his “‘say on the one hand this. . .’, but ‘on the other hand that. . .’”. The president’s quip has become synonymous with a profession that is prone to hedging its bets. …
Overview – The economy held up better at the start of the year than we had anticipated, but we still expect it to enter a recession in the second half of the year. Even though underlying inflation probably hasn’t peaked yet, we suspect the Bank of Japan …
The fall in employment in May suggests the Bank might not need to follow its 25bp hike this week with another in July. But with employment among prime-age people continuing to rise strongly and house prices surging last month, we still suspect the Bank is …
9th June 2023
Inflation ticks up as central bank sounds hawkish Russian inflation picked up slightly to 2.5% y/y in May and we think it will rise above the central bank’s 4% target in the coming months. Against a backdrop of large upside inflation risks and the hawkish …
We think US core inflation slowed from 5.5% to 5.2% in May (Tue.) We expect the Fed to leave its policy rate on hold this week, but hike in July (Wed.) ECB will probably deliver another 25bp rate hike but BoJ set to leave policy on hold Key Market Themes …
The oil price ended the week flat despite Saudi Arabia pledging to cut output by 1m bpd in July at the OPEC+ meeting last weekend. Most other commodity prices rose, supported by China’s May trade data which showed strong growth in most commodity imports. …
Petro crisis sparks rally in Colombian assets Colombia stumbles from political crisis to political crisis. After a major cabinet reshuffle in April, this week’s scandal included allegations of phone tapping and violation of campaign financing rules and …
The US dollar looks poised to end another week down a touch – the DXY index’s first consecutive weekly fall since April. That probably reflects yield gaps vis-à-vis most other developed markets (DMs) shifting against the greenback as surprise central bank …
The seven-month run of house price declines recently ground to a halt, with the Case-Shiller index showing an increase in prices in both February and March. This was partly driven by the temporary boost to demand at the start of the year from declining …
Agriculture dampened SA growth in Q1 South Africa’s Q1 GDP figures released this week revealed a big drag from the agricultural sector. Some of the factors that weighed on output (namely the weather) are likely to prove temporary but, even so, confidence …
Note: We’ll be discussing whether China’s post-zero-COVID recovery is already over in an online briefing at 09:00 BST/16:00 SGT on 15th June . Register now . Property support of limited use in isolation Stocks of Chinese property developers surged …
The euro-zone has fallen into recession, albeit only by the finest of margins – the economy contracted by 0.1% q/q in both Q4 last year and Q1 this year. The consensus view is that the worst is now behind us and that growth will accelerate, presumably in …
Labour market starting to loosen The fall in employment and the increase in the unemployment rate to 5.2% in May will probably not prevent the Bank of Canada from raising interest rates again at its July meeting, but the moves reinforce our view that the …
Although we think that the Fed is set to end its tightening cycle in July, we aren’t convinced that 10-year Treasuries will outperform 2-year Treasuries in the way that they have after recent Fed tightening cycles. We expect the Fed to wrap up its …
We expect the Fed to leave interest rates unchanged at next week’s FOMC meeting but, in what could be characterised as a “hawkish skip”, to signal via forward guidance (updated SEP forecasts and language in the statement) that officials are minded to hike …
Turkey embraces orthodoxy, but for how long? Optimism about a shift towards orthodox economic policymaking was at the heart of developments in Turkey this week amid the appointments of a new cabinet and central bank governor and a sharp fall in the lira. …
Labour market starting to loosen The increase in the unemployment rate to 5.2% in May will probably not prevent the Bank of Canada from raising interest rates again at its July meeting, as the weakness was partly a statistical effect related to reduced …
Inflows into EM financial markets have held up well over the past few weeks, with particularly strong inflows into local equities. That said, if we are right that a renewed period of global risk aversion lies in store, we suspect that these inflows will …
Central Bank Drop-In (15th June): We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England’s upcoming meeting in a 20-minute online briefing at 10:00 EDT/15:00 BST on Thursday . Register Now. We learnt this week that the …
Industry struggling to sustain momentum from early 2023 Mexico’s industrial sector expanded by 0.4% m/m in April but this only partially reversed a sharp decline in March and suggests that the economy is struggling to sustain its momentum at the start of …
Central Bank Drop-In (15 th June): We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England’s upcoming meeting in a 20-minute online briefing at 10:00 EDT/15:00 BST on Thursday . Register Now. The OECD joined the ranks of the …
CBR turns its hawkish rhetoric up a notch Russia’s central bank left rates on hold at 7.50% as expected today, but delivered an even more hawkish message as it said that pro-inflation risks have increased further and that it will consider the need to hike …
No more hikes in Thailand Inflation figures published this week for Thailand showed the headline rate fell from 2.7% y/y in April to just 0.5% in May, which puts it well below the central bank’s 1-3% target. A key factor behind the decline was a 11% m/m …
RBI hawkish, but inflation outlook improving The Reserve Bank of India (RBI) didn’t throw up any surprises when it kept the repo rate on hold at 6.50% this week. The move was widely expected and the muted reaction in local financial markets suggests that …
Inflation surprise strengthens case for more Norges Bank tightening Following May’s stronger-than-expected inflation data, a rate hike by the Norges Bank later this month looks nailed on. A 25bp move still seems most likely, but the risks are skewed …
Q1 GDP saw large upward revision The government in its May monthly economic report upgraded its view of the economy, changing its assessment to say that “the economy is recovering moderately”, dropping the previous qualifier that “there was some …
Rate hikes will drive double-dip housing downturn The big news this week was RBA Governor Lowe indicating that the Board’s patience to tolerate high inflation was waning. The Bank’s hawkish turn, coming at a time when unit labour costs are growing at …
Ueda resolutely dovish despite continued strengthening of price pressures Yield Curve Control here to stay at least until conclusion of review next year Inflation set to fall sharply next year which will make it difficult to abandon YCC The Bank of …
This page has been updated with additional analysis and charts since first publication. Inflation remains low as initial reopening effects begin to fade Producer price deflation deepened further last month to a 87-month low. Consumer price inflation …
While we anticipate that the ECB will deliver more rate hikes this year, we don’t think that this would trigger another leg up in long-term euro-zone government bond yields. In fact, we suspect that yields will fall a bit over the rest of 2023, partly …
8th June 2023
Although a lot of bad news now appears to be priced into US equity office REITS, the sector still faces significant challenges. This suggests to us that a material improvement in its fortunes is not likely soon. US equity REITs in aggregate have …
ECB almost certain to raise interest rates by 25bp next week. And likely to have a bias towards further tightening. We expect Lagarde to emphasise that policy will remain tight for a long time. A 25bp interest rate rise next week, taking the deposit …
We think Peru’s central bank will leave its policy rate on hold (00.00 BST) Inflation in China was probably very low last month… (02.30 BST) … but we think it remained elevated in Norway (07.00 BST) Key Market Themes After sitting out most of this year’s …
A handful of EM central banks were quick out of the blocks to tighten monetary policy in 2021 and one of the key lessons of the past year or so is that underlying inflation pressure is still proving incredibly hard to beat. The fight against inflation …
Overview – The region’s strong start to the year is unlikely to be sustained and we expect growth across Latin America to come in weaker than most expect this year and next. Inflation will continue to fall, but core price pressures are likely to remain …
Our updated industrial metros analysis, which now incorporates the current vacancy rate, continues to point to Memphis as having the strongest prospects for rent growth over a three-year horizon. Miami, Orlando, San Diego, LA and Nashville also rank …
Is Saudi Arabia taking its eye off the ball? Outside of the usual economics newsflow this week, Saudi Arabia has been the hot topic in the footballing and golfing world. It was announced control of four Saudi Pro League clubs is being transferred to the …
Dismal economic growth has established the Korean won as one of the worst-performing emerging market (EM) currencies against the dollar this year. We expect Korea’s bleak growth prospects and unfavourable yield gaps to keep the won weak, though its …
Inflation drops, but rate cuts still some time away Headline inflation in Mexico dropped to a 21-month low of 5.8% y/y in May and will continue to decline over the coming months. That said, the strong labour market and rapid wage growth mean that …
Preventing large-scale leaks of methane from Turkmenistan’s creaking infrastructure would be a welcome sign of emissions-cutting efforts broadening out from carbon dioxide to include other harmful greenhouse gases too. But while Turkmenistan has become …
Euro-zone in recession, outlook poor News that GDP contracted in Q1 after all means that the euro-zone has already fallen into a technical recession. Given that the impact of policy tightening is yet to fully feed through, we suspect that the economy will …
Refinancing risks increase The recent upward revision to our mortgage rate forecast and the fact that the majority of those that need to refinance this year are on two-year fixes means that we are now more worried about the risk posed by refinancing. …
Recent economic difficulties have forced online retail to tighten their returns policies. At face value, this seems good news for retail property as it may shift demand back to stores for certain categories. However the change is unlikely to be a big …
EZ already in recession, outlook still poor News that GDP contracted in Q1 after all means that the euro-zone has already fallen into a technical recession. We suspect that the economy will contract further over the rest of this year. Data released today …
The RBI’s decision to keep the repo rate on hold (at 6.50%) today comes as no surprise given the recent sharp drop in inflation. The central bank continues to strike a hawkish tone and the door remains ajar for further hikes. But with headline inflation …
Normalising supply could make future drop in demand more damaging The significant improvement in the RICS survey in May echoed the pause in house price falls in the past few months. But the survey also showed an increase in supply, which could …
RBI could be laying groundwork for cuts before long The RBI’s decision to keep the repo rate on hold (at 6.50%) today comes as no surprise given the recent sharp drop in inflation. The door remains ajar for further hikes but with headline inflation set to …
