Investors have welcomed the broadly unsurprising results of the first round of the French legislative elections, but the discount on French financial assets is still there and, in our view, likely to stay. The final results of the election’s first round …
1st July 2024
Much of the recent focus has been on France’s political turmoil, but Germany has had its own troubles with disagreement over the 2025 budget threatening the survival of the governing coalition. While we think an agreement will eventually be found, budget …
More signs that the economy is struggling for momentum The ISM manufacturing index was little changed in June, leaving it consistent at face value with a small fall in GDP. While the ISM has not been a good leading indicator of GDP growth in recent years, …
Saudi Arabia’s Crown Prince Mohammed bin Salman’s (MbS) ultimate succession to become king is inevitable and a formality. Having been the de-facto leader of the Kingdom for several years it may not result in much of a deviation in economic policymaking. …
Disinflation resumes, but services inflation stays high Inflation figures for Germany and other major euro-zone economies suggest that, after rising in May, euro-zone headline and core inflation edged back down in June. But services inflation remained …
In the aftermath of Joe Biden’s poorly received debate performance, Group Chief Economist Neil Shearing explains the market response and highlights potential economic risks around a second Trump presidency. He also reviews the latest US inflation data and …
There have been two major developments in markets over the past week. The first is the initial round of voting in France’s parliamentary election, which was won by Marine Le Pen’s far-right National Rally party but where a strong turnout and the formation …
PMI still weak, but at least its improving South Africa’s manufacturing PMI remained weak in June but improving electricity supply conditions and reduced political uncertainty should support a modest pick-up in activity. That said, the economy is in a …
Net lending to property shows early signs of a recovery Net lending to property increased for the second consecutive month in May, rising by £1.0bn. The increase was entirely due to a rise in lending to standing investments, with development lending …
This page has been updated with additional analysis since first publication. Further evidence the drag on activity from higher interest rates is fading May’s money and lending data provided a bit further evidence that the drag from higher activity is …
Surveys point to Turkey rebalancing, Russia overheating The manufacturing PMIs for June provide encouraging signs that a rebalancing of Turkey’s economy is underway, with domestic demand weakening and inflation pressures softening. But in Russia, the …
House prices flat in Q2 Although house prices rose slightly in June, an earlier dip means they were flat on the quarter in Q2. With signs mortgage rates are causing demand to falter and that supply is improving, we think that house prices will flatline at …
The PMIs from Emerging Asia picked up strongly last month, but we doubt this will last given the subdued outlook for global demand. Meanwhile, the decline in inflation in Indonesia last month supports our view that the central bank will cut interest rates …
With unhedged yield gaps still very much in favour of overseas bonds and hedged returns set to improve as overseas central banks slash borrowing costs, Japanese investors won’t respond to higher JGB yields by repatriating capital. And while we expect …
Housing market will cool in earnest Australian house price gains softened just a smidge in June as housing demand held up reasonably well. However, as strained affordability takes its toll, we still think that house price growth will ease markedly in the …
Surveys likely understate health of manufacturing sector This report was first published on Monday 1 st July covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Wednesday 3 rd July. …
This website has been updated with additional analysis since first publication. Tankan points to renewed strengthening in price pressures The Q2 Tankan survey suggests that economic activity will remain sluggish but the most striking development was the …
Final results still uncertain but fiscal outlook will be worse after the election The preliminary results of the first round of voting are broadly in line with the final opinion polls, showing that Emmanuel Macron’s centrist coalition has lost out to both …
30th June 2024
Incumbent President Biden’s uneven performance during the debate yesterday with his predecessor and challenger, Donald Trump, has reduced Biden’s perceived chance of winning re-election significantly. Financial markets have not reacted much to this …
28th June 2024
The US dollar index looks set to end the week broadly unchanged after core PCE came in line with expectations today. Yesterday’s presidential debate in the US also does not seem to have had much impact on the dollar despite the sizable change in election …
The May CPI data were a step back after the run of soft core price readings in the first quarter. The broader evidence stills seems supportive of a July interest rate cut, but the next CPI release for June, to be released in the run up to that meeting, …
This page brings together our analysis of how Donald Trump's return to the White House will affect the outlook for emerging economies. Use the Table of Contents on the right to navigate. All of our analysis on the election, including the implications for …
Biden debate woes leave Trump ahead Trump’s conviction vs Biden’s lack of conviction Joe Biden’s faltering debate performance leaves Donald Trump as the narrow favourite to win this November’s presidential election. There isn’t an alternative Democratic …
Africa Chart Pack (June. 2024) …
Failed coup, economy on the ropes The news on Wednesday that armed soldiers had tried to storm Bolivia’s presidential palace in an attempted coup seemed to hark back to the Latin America of the 1970s (as well as a James Bond film of the 2000s). The …
Supply-side reform won’t fix consumer weakness This week, the government published guidelines on creating “new consumption scenarios” with the aim of “coordinating the expansion of domestic demand while deepening supply-side structural reforms”. We’ve …
Heading for a slightly stronger second quarter The solid rise in GDP in April and preliminary estimate of a small increase in May leave the economy on track to perform better than the Bank of Canada expected this quarter, but not by enough to have any …
We’re just two days from the first round of the French legislative election. (All of our election coverage can be found here .) Voting closes on Sunday at 8pm Paris time (7pm BST) and polling organisations should release estimated results shortly …
The Dallas Fed survey of oil and gas firms released this week revealed deep dissatisfaction with the Biden administration. While there was little of note in the closely trailed headline numbers – participants indicate that oil and natural gas production …
How could the French election result impact CEE? The surprise decision by French President Macron to announce early parliamentary elections (with the first round taking place this Sunday) has led to a period of turbulence in European bond markets. The …
It is striking how calm UK financial markets have been ahead of next week’s general election. As we set out in our UK Markets Chart Pack , while investor concern over the result of the French elections has led to a near-30 basis points (bps) rise in …
Inflation fading, consumers faltering The core PCE deflator increased by only 0.08% m/m in May and, even allowing for some modest upward revisions to the gains in earlier months, that was enough to pull the annual core inflation rate down to 2.57%, from …
South Africa: cracks already showing in the GNU Disagreements between the South Africa’s largest party, the ANC, and its main partner in the government of national unity (GNU), the DA, over cabinet posts reinforces our point that the coalition is fragile …
Further economic weakness in Korea Korea’s economy weakened markedly in May. Data published today show that retail sales fell by 0.2% m/m last month, a second consecutive monthly fall. With the labour market cooling and high interest rates weighing on …
The UK offers a microcosm of green fiscal issues The issue of paying for the green transition has been a recurring theme in the run-up to the forthcoming UK election; the watering down of Labour’s flagship climate policy earlier this year, which had …
More to plunge in inward FDI that meets the eye The Q1 2024 Balance of Payments data released this week has refocused attention on the slump in net foreign direct investment (FDI) inflows. In the four quarters to Q1, net FDI inflows dropped to US$26.5bn, …
Services inflation remains high Inflation figures for France, Italy and Spain suggest that euro-zone headline inflation edged down in June, while core and services inflation held broadly steady. This supports our view that the ECB will cut rates only …
China’s economy has regained some momentum in recent quarters and should continue to do relatively well in the near-term. Consumers remain cautious, and a slew of policy measures aimed at supporting the ailing property sector has done little to boost new …
This page has been updated with additional analysis since first publication. Stronger economy good news for whoever is Prime Minister next Friday The upward revision to Q1 GDP growth from 0.6% q/q to 0.7% q/q (consensus forecast 0.6% q/q) suggests whoever …
Yen sliding to multi-decade lows The yen continued its descent this week, climbing above the 160 mark against the dollar that triggered foreign exchange intervention in late-April . It has not been this weak since 1986. The Ministry of Finance this week …
A narrower path The release of hotter-than-expected CPI data this Wednesday sent shockwaves through financial markets. Indeed, investors are now pricing in a nearly 40% chance of 25bp rate hike by year-end, whereas at the start of the week they thought …
Industrial output set to fall yet again The strong rebound in industrial production in May suggests that Japan’s economy turned a turner this quarter, but if output falls as much as firms are expecting this month, that strength won’t last. The 2.8% m/m …
This website has been updated with additional analysis since first publication. Rebound in underlying inflation allows BoJ to hike rates further The continued fall in the job-to-applicant ratio isn’t translating into a higher labour market and the bulk of …
Rates on hold again, but a dovish tilt Mexico’s central bank left rates unchanged at 11.00% today, but there was a surprising dovish shift in the Board’s communications – despite the post-election fall in the peso. A small reduction in the policy rate …
27th June 2024
The slight increase in mortgage rates since the beginning of the year appears to have reached a tipping point for demand. At the same time, the supply of homes being put up for sale has increased. This combination of softening demand and more ample supply …
The last US tech bubble inflated in a different way to this one. A comparison of the two leads us to conclude that this bubble will continue to inflate , despite the recent wobble in Nvidia’s share price . To re-cap, forward twelve month (FTM) earnings …
We expect a 200,000 increase in non-farm payrolls in June. The unemployment rate probably edged back down to 3.9%, while we expect a renewed slowdown in wage growth. The reacceleration in non-farm payroll growth to 272,000 in May was at odds with other …
News that some top-rated CMBS in both the US and Europe are set to make losses is in line with our previous view that distress will ramp up in 2024. But, to date, the troubled securities have all been backed by some of the worst-performing assets across …
