The fracturing of strategic supply chains into US and China trade blocs threatens Australia’s existing significant trade with China but also presents Australia with an opportunity to align its trade relationships with its existing security …
15th March 2023
This report has been updated with additional analysis and a table and chart of key data. Inflation past its peak Saudi Arabia’s headline inflation rate slowed to 3.0% y/y in February on the back of an easing of both food and non-food inflation. We think …
Soaring core inflation adds to pressure on the Riksbank Although it was partly due to higher food prices, the jump in the “core” measure of inflation in Sweden to 9.3% will reinforce policymakers’ determination to raise rates further. We expect another …
Vietnam’s central bank unexpectedly lowered interest rates late yesterday as it aims to support the struggling economy which has been hit hard by the downturn in global demand and problems in the property sector. We think the central bank will tread …
This year’s Shunto should result in the strongest negotiated pay hikes in decades. But the average Japanese employee will have little to rejoice in. Weaker corporate profits as well as a likely loosening of labour market conditions on account of a …
A stronger start to 2023 Activity data for the first two months were broadly as expected, showing a jump in consumer spending coupled with modest gains in investment and industrial output. High-frequency data suggest that this recovery has continued in …
The Canadian banking sector is heavily concentrated, reducing the risk that deposit runs at small lenders might trigger a broader crisis of confidence for the entire sector. As things stand, the chance of the Bank of Canada soon cutting interest rates – …
14th March 2023
OPEC sticks together and will keep output constrained OPEC’s monthly report for March noted that the group has stuck to the production targets agreed in October last year. Accordingly, we have revised down our forecasts for the group’s output in 2023. The …
Stronger-than-expected economic data in January led to a rebound in market interest rate expectations and a jump in mortgage rates from 6.2% at the start of February to 6.8% in March. That drove mortgage applications for home purchase lower and means …
At the time of writing, financial markets appear to be stabilising after the turmoil caused by the collapse of SVB. And it doesn’t look like EMs have suffered large capital outflows or strains in their banking sectors. If this relatively benign scenario …
Euro-zone industrial production probably edged up in January (10.00 GMT) The UK’s Spring Budget may contain limited short-term fiscal loosening (12.30 GMT) We think that US retail sales fell by 0.8% in February (12.30 GMT) Key Market Themes How the …
Given the large amount of uncertainty about how the fallout from SVB’s collapse will evolve, we have grouped possible outcomes into three broadbrush scenarios. Only in the worst scenario of financial problems spreading overseas will the global effects …
Starting with the ECB today, some major central bank decisions are due in the shadow of recent banking sector turmoil. Will policymakers press ahead with their fight to rein in inflation, or will the risk of financial instability inject caution into their …
Strong start to the year but risks on the horizon The manufacturing sector made a stellar start to 2023, but the surveys suggest growth will soon slow and the banking sector problems in the US could weigh on manufacturing demand over the rest of the year. …
Strong inflation data counter financial stability concerns The 0.5% m/m rise in core consumer prices last month adds to the evidence that inflation remains stubbornly high, but the ongoing fallout from the SVB crisis over the coming days is still likely …
Strong inflation data unlikely to outweigh financial stability concerns The 0.5% m/m rise in core consumer prices last month adds to the evidence that inflation remains stubbornly high, but the ongoing fallout from the SVB crisis over the coming days is …
Latest figures confirm plummeting demand during Q4 The detailed mortgage lending data for Q4 showed a slump in demand, as rising mortgage rates began to bite. The latest MLAR data confirmed the sharp turnaround in market conditions and suggest that, with …
This checklist helps clients keep track of the key forecasts announced during the Spring Budget at 12.30pm (GMT) on Wednesday 15 th March. Our more detailed preview is here . We will send a Rapid Response shortly after the speech, we are hosting a “Drop …
Wage growth eases despite labour market remaining tight The labour market remained tight in January. Even so, the Bank of England will breathe a sigh of relief as wage growth is easing. Together with the collapse of a couple of US banks having tightened …
Wage growth eases despite labour market remaining tight The labour market remained tight in January. Even so, the Bank of England will breathe a sigh of relief as wage growth is easing. But the fallout from Silicon Valley Bank’s collapse suggests that the …
Australian banks are unlikely to experience the same valuation losses that resulted in the demise of Silicon Valley Bank. The biggest risk is that a freezing up of overseas bond markets shuts down funding avenues for the major banks, but the Reserve Bank …
Even if the collapse of several mid-tier banks doesn’t develop into a full-blown systemic crisis, it will more than likely trigger a credit crunch. That raises the risk that the economy will suffer a harder landing, which would accelerate the needed …
13th March 2023
Clients can find our coverage on the SVB collapse on our designated landing page here … …and sign-up here for our Drop-In on the policy outlook for the ECB (10.00 GMT) We think US consumer price inflation fell only slightly, to 6.1%, in February (12.30 …
The restoration of diplomatic ties between Saudi Arabia and Iran adds to signs that geopolitical tensions in the Middle East are easing, which may help to reduce risk premia in financial assets in the region as well as the oil market. Tensions will not …
This Global Economics Update answers 5 key questions about the fallout from SVB’s collapse. While the situation remains in flux, there are good reasons to think that it does not call into question the solvency of the US or wider global financial system …
Construction slump holds back industry Mexico’s industrial sector stagnated in January as a slump in construction output offset solid increases in output in other subsectors. Early evidence suggests that activity held up well last month but, with the US …
Slight uptick in February’s lending, but still below 2022 average Net commercial real estate lending ticked up in February following a slowdown the month prior. That said, monthly lending activity across all sectors remained below the average for 2022. …
Drop in headline inflation not large enough to prevent April rate hike The slight drop in headline CPI inflation in February won’t have been enough to ease the concerns of the hawks on the MPC and, as a result, we now expect another 25bp hike to the repo …
It started with Silicon Valley Bank’s collapse, but has spread to Europe. Worries about the health of bank balance sheets have fuelled turmoil in global markets amid fears that this could mark the start of the next financial crisis. This dedicated page is …
Overview – The economy is on the brink of a mild recession but with underlying inflation still accelerating, we expect new Bank of Japan Governor Ueda to end Yield Curve Control at the upcoming meeting in April. Key Forecasts Table Domestic Demand – We …
This dashboard shows our latest national sector-level commercial real estate forecasts for the next five years, as well as summary forecasts for a handful of core macroeconomic variables. If you have subscriber access to the data underlying this …
US authorities intervened on Sunday following the extraordinarily rapid collapse of Silicon Valley Bank last week. Have they done enough to calm markets, what does this mean for the need for further monetary policy tightening and what are the contagion …
Neil Shearing Group Chief Economist I had intended to write this week’s note on lags in monetary policy – then SVB blew up, Signature Bank followed in quick succession, and US policymakers were forced to introduce a package of emergency measures over the …
Economy continues to boom in early 2023 The large increases in industrial production and retail sales in Turkey in January suggest that the economy got off to a strong start in early 2023. Activity will have been disrupted from the earthquakes last month, …
Fed, Treasury and FDIC lay out fire break for banking system In the wake of the collapse of Silicon Valley Bank ($215bn in assets) – which has been followed today by the demise of Signature Bank ($110bn) – the Fed, Treasury and FDIC have acted …
12th March 2023
The circumstances of the Silicon Valley Bank (SVB) collapse are unique enough that it probably won’t trigger a widespread financial contagion. Nevertheless, it is a timely reminder that when the Fed is singularly focused on squeezing inflation by jacking …
10th March 2023
The dollar’s sharp rally after Fed Chair Powell’s hawkish testimony to Congress on Tuesday sent US interest rate expectations soaring now looks like ancient history. Instead, after unexpected turmoil in the US banking sector and today’s …
We think US consumer price inflation fell slightly to around 6% in February (Tue.) Retail sales in China probably rebounded in January and February (Wed.) We expect the ECB to hike by a further 50bp (Thu.) Key Market Themes US government bond yields …
Failed dockworker union negotiations on the West Coast have led to further diversion of US imports toward the East and Gulf Coasts, supporting warehousing demand in those markets for longer than expected. We expect a degree of this demand to persist into …
Even though US non-farm payrolls increased by 311,000 in February, the report contained signals that were consistent with slowing inflation, prompting a fall in US interest rate expectations today. Despite this, commodity prices are still broadly down on …
Despite the renewed hawkishness of central bankers elsewhere, the speech that followed the Bank of Canada’s policy announcement this week suggests that the bar to resume rate hikes remains high. Bank still comfortable with its “conditional pause” The …
Powell in hawkish mood Fed Chair Jerome Powell confirmed this week that interest rates are set to rise higher than we previously anticipated. Powell noted that the strength of the January activity, employment and inflation data indicated that …
Broad-based falls in inflation last month Russian inflation came in slightly softer than expected in February, at 11.0% y/y, and it will fall to the central bank’s 4% target in March as base effects pass through. We don’t think there’s been enough …
There were some surprises in the Q4 commercial real estate data from the euro-zone, in particular in how swiftly yields have risen. Taken together with changes to our economic view these imply further downgrades to our forecasts. Notably we now think that …
Brazil: is a Q2 rate cut plausible? The prevailing monetary policy story in Brazil so far this year has been one of ‘higher for longer’. We set out such a view recently , the BCB’s communications point this way and analyst expectations have shifted up. A …
The view that interest rates in developed markets may rise further and stay higher for longer than previously anticipated gained further traction this week following US Fed Chair Jerome Powell’s hawkish comments on Tuesday. Our US Economics team revised …
Hours worked rise strongly despite employment slowdown Employment growth slowed sharply in February but the rise in hours worked suggests that the economy performed well last month. With the low unemployment rate putting upward pressure on wage growth, …
Payrolls strong but rest of report suggests 25/50bp Fed hike debate unresolved The above-consensus 311,000 increase in payroll employment last month confirms that the super-sized 504,000 gain in January wasn’t just a seasonal distortion, but the rest of …
