China’s tit-for-tat retaliation in its rapidly escalating trade war with the US exerted some renewed pressure on equities and the dollar today, with bonds still buffeted by expectations of monetary easing and signs of market dislocation. Our base case …
11th April 2025
Tariffs continue to buffet commodity markets Changes in US tariff policy continued to drive dramatic swings in commodity prices this week – Brent crude oil prices briefly hit a four-year low of $58.5pb in intraday trading on Wednesday. There is still a …
One step forward after two steps back and with a mountain ahead Following the favourable CPI and PPI data, we estimate that the core PCE deflator rose by a below-target 0.05% m/m in March. Even taking into account a likely upward revision to the rise in …
This week’s historic changes in US trade policy and the associated market fallout point in the direction of a weaker euro-zone economy, lower inflation and looser monetary policy. While US tariff policy has become extraordinarily volatile, we are assuming …
Inflation rises again, Copom to deliver a bit more tightening The jump in Brazil’s headline inflation rate to 5.5% y/y in March looks set to be followed by further increases towards 6% y/y over the coming months. Copom will almost certainly deliver a bit …
This week’s coalition agreement sets the stage for a substantial fiscal stimulus which should eventually get Germany’s economy growing again. But the new government will have to deal with new challenges from the US which mean there is unlikely to be much …
Argentina & the IMF – 23 rd time lucky? The IMF announced this week that it had reached a Staff-Level Agreement with Argentina on a 48-Month Extended Fund Facility totalling $20bn – if approved, it would be the 23 rd IMF deal in Argentina’s fraught …
At some point a partial rollback in tariffs is likely… The effective US tariff rate on China started the year at 11% (based on 2024 weights). It is now at 145%. Earlier this week we noted that tariff rates above 100% would cause Chinese exports to the US …
Opportunities for India amid tariff chaos All of our analysis of the latest twists and turns in the trade war – notably President Trump’s decision to postpone reciprocal tariffs (bar China) for 90 days – can be found here . Of course, things are subject …
This page has been updated with additional analysis since first publication. Surprisingly strong growth to prove short-lived, as rises in tariffs and taxes bite The surprisingly strong 0.5% m/m rise in GDP in February (consensus +0.1%, CE 0.0%) and the …
Australian economy should hold up As one might have expected, the fallout from Trump’s trade war continued to dominate the headlines this week. In short, a deep rout in US bond markets appears to have convinced Trump to pare back tariffs on several …
BoJ will stay on sidelines for now The relief that followed the suspension of reciprocal tariffs for all countries except China on Wednesday proved short-lived as bilateral tariffs between China and the US are still being ratcheted up to eye-watering …
Downside risks to the economy that prompted March cut have eased Meanwhile, underlying inflation pressures are far too strong for comfort Bank likely to pause next week, but we still expect further cuts this year Despite the economy facing the existential …
10th April 2025
President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP …
The US-China trade war and OPEC+’s surprise oil output hike has sent oil prices tumbling and are now below breakeven fiscal and external levels for the many Gulf oil producers, notably Saudi Arabia. If oil prices stay low or even fall further, governments …
Trump and OPEC+ cloud the outlook Commodity prices have been on a rollercoaster ride but, on net, many prices remain lower than before “Liberation Day”. In the coming months, our base case is that the 90-day pause on tariffs will be extended. That said, …
Despite President Trump’s latest decision to pause the US’s “reciprocal” tariff regime for 90 days, there is still a real risk that the second-order effects of higher US tariffs on the UK economy are bigger and that UK inflation and interest rates fall …
We have updated our forecasts for Canada to account for the latest changes in US trade policy. (See Table below.) A recession should be avoided, but the harsh tariffs on the vehicle sector and uncertainty about the future of the USMCA mean GDP growth is …
The direct trade impact of US import tariffs on Africa is likely to be limited, but there could be more harmful indirect effects via weaker growth in other key trading partners, lower commodity prices and/or a more challenging external financing …
Core PCE prices on track for below-target 0.11% gain The unexpectedly small 0.06% m/m rise in the core CPI in March was partly due to steep falls in hotel prices and airline fares, which reflect both weakening domestic demand and the recent drop in …
We think the ECB will cut its deposit rate next week and again in June and July. The Trump tariff shock has heightened downside risks to inflation. But policymakers will give little forward guidance next week. Despite President Trump’s latest decision to …
The troubles at Brazilian bank Banco Master that have grabbed the headlines recently seem to be contained and, by most measures, the banking sector as a whole appears to be in good shape. But there has been a sharp run-up in lending to households over the …
Trump’s tariffs have darkened the outlook for industrial demand across Europe, but Germany looks more exposed than most. Even if the paused 20% reciprocal tariff on EU imports is not reinstated, the blanket 10% tariff and product-specific tariffs, most …
Despite the 90-day pause to the US’s “reciprocal” tariff regime, ECB policymakers will still need to assess the impact of higher US tariffs for euro-zone inflation. Some have argued that tariffs could boost euro-zone inflation in the medium term, but our …
The trade war has merely delayed rather than scuppered further policy tightening by the Bank of Japan. Accordingly, we’re sticking to our forecast that the 10-year JGB yield will rise to 1.75% by year-end. Whereas the 10-year US Treasury yield has on net …
US President Trump’s decision to pause the implementation of many of his previously announced tariffs has sent markets – especially equities – soaring, but there are some risk premia remaining that might take longer to fade. We’d flagged only on Monday …
Inflation picks up, but loosening cycle still set to begin next week Egypt’s headline inflation rate increased to 13.6% y/y in March, but we still expect policymakers at the Central Bank of Egypt (CBE) to deliver the first interest rate cut in nearly five …
Low inflation and tariff uncertainty supports case for further monetary easing The central bank in the Philippines (BSP) resumed its easing cycle today by lowering its policy rate by 25bp (to 5.50%) and in its communications highlighted the threat to …
Housing activity set to slow in the near term March’s RICS survey suggests both the weak domestic economy and the headwinds from the global tariff storm continue to increase the downside risks to our 2025 forecasts for housing demand and prices. But the …
Trade war to exacerbate deflation Deflationary pressures persisted last month and will almost certainly deepen over the coming quarters as it becomes more difficult for Chinese firms to export their excess supply. CPI deflation eased from -0.7% y/y in …
Although President Donald Trump was able to resist the stock market sell-off, once the bond market began to weaken too, it was only a matter of time before he folded on his eye-wateringly high tariffs. Trump has announced an immediate 90-day pause, during …
9th April 2025
US Treasuries are not benefitting from market turmoil, and we suspect they will keep struggling. Today, China announced that it would charge an additional 84% tariff on imports from the US starting on Thursday. Unsurprisingly, equity markets didn’t take …
The lasting fallout on oil demand from President trump’s ‘liberation day’ tariffs and subsequent retaliation, coupled with OPEC+’s plan to quicken supply increases, pose a major downside to oil prices. There are still many moving parts at this stage and …
Enter your own universal and specific tariff scenarios and see the impact on the effective tariff rate, inflation and GDP. If you have subscriber access to the data underlying this dashboard, you can download it via the menu options in the top right of …
More encouraging figures from the previously underperforming Midwest region suggest that it may be turning a corner. But while this may continue for several quarters more, there has not been enough improvement in the longer-term fundamentals to expect it …
While Canada escaped “liberation day” relatively unscathed, the imposition of US tariffs and risk of more to come will still weigh on exports, consumer confidence and investment. With immigration also plunging, we now expect GDP to expand by just 0.4% …
Some oil producers, such as the UAE and Kuwait, should be able to easily weather a period of low oil prices. But a sustained decline in prices would be a bigger challenge for Saudi Arabia, which would need to tighten fiscal policy, and producers with weak …
Oil prices have now fallen well below the level needed to balance current accounts across much of the Gulf, which may raise concerns about the sustainability of the region’s dollar pegs. And, indeed, there are some tentative signs of pressure on pegs. …
With the exception of some industrial assets, commercial property in the UK is not directly impacted by the higher tariffs announced by President Trump and property equities have performed relatively well. Nevertheless, a 5% fall in property equity prices …
While gold prices have edged down since “Liberation Day”, this is not unusual during a sudden equity market selloff. In fact, gold’s track record suggests that prices are likely to rise from here, especially if a worst-case scenario for the US economy and …
Higher US tariffs will be a substantial drag on the euro-zone economy this year. Looser fiscal policy in Germany will give a small boost in 2026, but overall we expect the euro-zone to grow fairly slowly in the coming years. We also think that the tariffs …
