Global headlines this week have been dominated by the escalating conflict in the Middle East and attention is now focussed on Israel and the scale and nature of its response to Iran’s retaliatory attack on Tuesday. From a macro perspective, the key risk …
3rd October 2024
Access to commodities – particularly critical minerals – is a growing area of competition between China and the West. And those EMs with deposits of the minerals used in new and low-carbon technologies are likely to see higher investment and, ultimately, …
China’s recent stimulus announcements are still at the top of many investors’ minds, at least judging by the high level of client interest in the online briefing we ran on the topic yesterday. We’ve wrapped up our answers to the most common questions we …
Stronger-than-expected inflation rules out rate cuts this year The smaller-than-expected decline in Turkey’s headline rate to 49.4% y/y in September will be a disappointment to policymakers at the central bank (CBRT), and supports our view that a …
This page has been updated since publication with additional analysis. Sharp drop in inflation will encourage further cuts by SNB The unexpectedly sharp fall in Switzerland’s headline and core inflation in September will cement the SNB’s dovish stance and …
The federal budget foresees an unusually large jump in cash outflows that don’t feed into the underlying cash balance in 2024/25. However, the actual boost to activity will be much smaller than the budget suggests and it will have run its course in …
While the latest escalation of the conflict between Israel and Iran is worrying, our view remains that it would take a significant further widening of the war, including actual disruption to energy supply chains, to make a material difference to the …
2nd October 2024
Until the geopolitical situation in the Middle East deescalates, oil prices will clearly remain at risk of spiking higher. But against a backdrop of faltering demand and greater supply in the wider oil market, the risks to oil prices over the next year …
MPC shake-up has, on balance, given the panel a more hawkish bias We expect no change in the repo rate next week, a view shared by the consensus But conditions will be in place for policy loosening to start in December Little is known about the monetary …
The euro-zone has stalled, the US labour market is cooling and China has only belatedly announced stimulus measures. The world economy is entering what our latest Global Economic Outlook describes as “a soft patch” – but for how long and how soft? And …
Planned austerity would dampen growth The new French government’s plans to tighten fiscal policy by as much 2% of GDP next year would help to put the public finances on a sounder footing but also risk pushing the economy towards recession. It would also …
NBP on hold, monetary easing in 2025 will be limited The decision by the National Bank of Poland (NBP) to leave its policy rate on hold again today, at 5.75%, was never in doubt, and we continue to think that the easing cycle won’t resume until mid-2025. …
Sharp fall in mortgage rates lifts applications The impact of lower mortgage rates was finally evident in mortgage applications in September, with applications for home purchase rebounding to a three-month high. With mortgage rates falling to little more …
Global Commercial Property Chartpack (Q3 2024) …
One way the US election could influence the UK economy would be if Donald Trump won and delivered on his pledge to put a 10% tariff on UK exports being sent to the US. We suspect the impact on UK activity from such a policy would be small (and perhaps …
In the wake of Iran’s missile strike on Israel on Tuesday, Deputy Chief EM Economist Jason Tuvey and David Oxley, our Chief Commodities and Climate Economist, talk about implications for the global oil market, including: What an Israeli retaliation …
Despite driving a surge in developer stock prices, the property support measures announced so far aren’t that different from previous efforts and are unlikely, on their own, to deliver much better results. Achieving the Politburo’s recently upgraded goal …
We held a Drop-In yesterday to discuss what investors should expect as Claudia Sheinbaum takes over the presidency in Mexico. A recording of the event can be found here . This Update answers some of the questions that we received, including several that …
We expect the RBNZ to move its easing cycle up a gear and cut the Official Cash Rate by 50bp at its meeting next week. What’s more, given the Bank’s tendency to loosen policy aggressively, we think the policy rate will eventually be slashed to 2.25%, …
The fall in the EM manufacturing PMI in September suggests that growth slowed last quarter and we think this will continue over the coming months. The PMIs did at least provide encouraging signs that price pressures continued to ease. The EM manufacturing …
1st October 2024
Brent crude oil has jumped by around 4% to ~$74.5pb at the time of writing, following reports that Iran is preparing a ballistic missile strike against Israel. Much remains uncertain. A key issue – if an attack materialises – will be its size and whether …
In addition to indicating that goods price pressures eased in September, the latest batch of manufacturing PMIs suggest that global industry slowed sharply towards the end of Q3. But with interest rates falling in DMs and more stimulus on the way in …
The August JOLTS data provides some reassurance against fears that labour market conditions will deteriorate further, while the sharp fall in the private quits rate suggests that core services inflation will moderate. The rebound in the job openings rate …
Note: the last chart was previously uploaded incorrectly and was corrected on the 8th October The pivot toward stimulus reduces near-term risks and should provide some much-needed support to an economy struggling with a softening labour market and a deep …
Inflation in Thailand is the lowest not just of any country in Asia, but across the emerging world. (See Chart 1.) The headline rate in August fell to just 0.4% y/y, while the core rate was 0.6%. (See Chart 2.) We expect inflation to rise a little over …
Some signs of life in manufacturing The ISM manufacturing index was unchanged in September, although the jump in the production index and rebound in new orders paint a slightly less negative picture heading into the fourth quarter. The unchanged reading …
Apartment markets are turning a corner, and we now expect the sector to outperform over the five year forecast. As new supply drops back from the second half of next year, we expect a mixture of Southern metros and the major markets to see the greatest …
We now expect the ECB to cut interest rates by 25bp at each of its next four meetings, taking the deposit rate down from 3.5% currently to 2.5% in March. Following Christine Lagarde’s comments to the Committee on Economic and Monetary Affairs yesterday, …
Sharp rise in PMI suggests economic recovery is on track South Africa’s manufacturing PMI rebounded in August, finally replicating the improvements we have seen in other survey indicators. A backdrop of interest rate cuts and improving supply conditions …
This page has been updated with additional analysis since first publication. Services inflation remains sticky The drop in euro-zone headline inflation below 2% in September should be sufficient to persuade the ECB to cut rates in October, even though …
Overview – We are not expecting the planned fiscal policies of the government to derail the economy – we expect GDP to grow by 1.0% this year and by a decent 1.5% in both 2025 and 2026. Instead, the main influence of the government’s plans to raise public …
PMIs sink in Turkey and Russia The sharp fall in the manufacturing PMIs in Turkey and Russia in September provide further evidence that their economies are slowing. But the continued rise in the prices balances of the survey in Russia will be a concern …
The September PMIs from Asia generally declined from the previous month. And while the PMI surveys aren’t always a good guide to the hard activity data, their recent signals are consistent with our expectation for manufacturing activity in Asia to …
We recently held a series of Asia-focussed roundtable discussions with clients in London, covering an array of topics including the impact of Fed easing, the US election, global fracturing and China’s stimulus blizzard. This Update answers several of …
This page has been updated with additional analysis since first publication. Consumer rebound not as strong as it seems The solid pickup in retail sales in August was driven in part by temporary factors, meaning that the underlying momentum behind …
Slowdown in house-price growth has further to run With new listings rising rapidly, the housing market is shifting in favour of buyers. Accordingly, we think house price growth will ease further in the months ahead. Allowing for seasonal swings, house …
The economy is stuck in a period of below-potential GDP growth, with previous interest rate hikes weighing on consumer spending and investment. This will keep downward pressure on core inflation, which we expect will reach the Bank of Canada’s 2% target …
30th September 2024
Headline GDP growth in the Gulf economies will strengthen in 2025 as oil output cuts are unwound. But lower oil prices will prompt a turn to fiscal consolidation in most of the Gulf, causing growth in non-oil sectors to slow. Elsewhere, balance sheets in …
The trouble with European green policy Mario Draghi’s report on EU competitiveness , published this month, provided food for thought on the EU’s decarbonisation strategy. There were a couple of key points of discussion. First, Mr Draghi emphasised the …
Germany and Italy HICP (September) Fall in inflation strengthens case for rate cuts The falls in headline and services inflation in the major euro-zone economies in September, along with evidence that price pressures are softening and activity slowing, …
The strike by Israel in Lebanon that killed Hezbollah’s leader represents a major escalation of hostilities in the Middle East and all eyes are now on the next actions by Israel and Iran. On its own, this escalation would point to higher oil prices and …
We doubt China’s equities will continue to outperform Japan’s through the end of 2025, despite their recent divergence. Stock markets in two of Asia’s largest economies have continued to head in different directions today. China’s CSI 300, for example, …
Net lending to property sees further increase as investment recovers Net lending to property reached £1.26bn in August, up from £520m the previous month. While lending to standing assets was responsible for the lion’s share of the increase, lending for …
Tankan points to continued recovery This website has been updated with additional analysis since first publication. The slight rise in business conditions across all firm sizes in the latest Tankan suggests that the robust rebound in activity in Q2 will …
German state data point to sticky core inflation CPI inflation data published by the major German states this morning suggest that headline HICP inflation fell sharply in both Germany and the euro-zone in September, as was widely expected. But core and …
This page has been updated with additional analysis since first publication. Fading drag on credit from higher interest rates is supporting the economy August’s money and lending data provide further evidence that the gradual improvement in credit demand …
For good reason, much of the attention around what another Donald Trump presidency would mean for the US economy has centred on his proposals to jack up tariffs and clamp down on immigration. If he wins in November and makes good on these pledges, you can …
