Core price pressures remain slightly elevated, as housing eases The 0.31% m/m increase in core CPI in November, which left the annual core inflation rate unchanged at 3.3% for a fourth month in a row and pushed the three-month annualised rate up to an …
11th December 2024
Overview – GDP growth in the Middle East and North Africa will accelerate in 2025 on the back of higher oil production in the Gulf. The UAE will be the Gulf’s top performing economy and, elsewhere, we expect that growth in Egypt and Morocco will …
Our forecast that commercial real estate is set for a modest recovery is dependent on our view that a decline in gilt yields will help stabilise property yields. But if interest rates don’t fall back the outlook for returns could be a lot more …
Softer-than-expected inflation points to further SARB cuts in 2025 The smaller-than-expected rise in South Africa’s headline inflation rate, to 2.9% y/y, in November, coupled with the surprise contraction in GDP in Q3, means that the monetary policy …
While emerging market (EM) dollar bonds have gained some ground lately, they have underperformed US high-yield corporate bonds in total return terms, and we suspect they will continue to lag next year. The stripped spread of the JP Morgan Global EMBI …
10th December 2024
2025 will be a far quieter year in terms of elections than this year was. But there are some key votes that will, among other things, determine whether Argentina’s President Milei builds support for his radical stabilisation plan and whether the Czech …
The price of natural gas in Europe was thrust into the spotlight during Europe’s energy crisis and remains a key political and industrial pressure point. In short, we expect natural gas prices in the EU to halve over the coming years as global LNG …
The peak in new apartment supply has passed, with completions set to drop back sharply over the next few years. If demand continues to hold up well as we expect, this should put downward pressure on the vacancy rate and support a modest pick-up in rent …
Investors’ enthusiasm for AI appears to have supported an increasingly broad set of equities of late, even if much of the associated rise in market capitalisation remains concentrated in a few of the largest firms. In August we noted that investors had …
While mortgage interest cost (MIC) inflation has historically turned negative during, or after, loosening cycles, we expect it to remain positive this time and rebound from 2026. This is because, in contrast to previous monetary policy cycles, the …
Our new Bank of England Caseometer helps track whether the Bank is becoming more inclined to cut interest rates faster and further or slower and not as far. Our forecast is that rates will continue to be cut gradually, but that they will fall to 3.50% in …
Commodities Chart Pack (Dec. 24) …
Rising inflation points to Copom stepping up tightening tomorrow The further rise in Brazil’s inflation rate, to 4.9% y/y, in November alongside the weakness in the real and strong economic growth mean that Copom is nailed on to step up the pace of …
This publication has been updated to reflect changes to our forecasts after the October GDP release on 13th December 2024. Overview – Despite the deterioration in the outlook for the UK's key trading partners, we remain optimistic that UK GDP growth will …
Overview – After a stellar run, India’s economy has entered a softer patch that will continue for a few more quarters. We think that will portend an underperformance in local equities relative to other major benchmarks. Headline CPI inflation is likely …
Disinflation taking hold before sharp easing of price pressures in Q1 This report has been updated with additional analysis since first published. Egypt’s headline inflation rate slowed from 26.5% y/y in October to 25.5% y/y in November and, with falls in …
The RBA sounded more dovish today and it’s looking increasingly likely that it will lower interest rates sooner rather than later. While a downside surprise in Q4 inflation could trigger a February rate cut, we think the continued tightness of the labour …
Export volumes have further to rise, despite tariff threat Export growth slowed sharply last month but we doubt this signals the end of China’s recent export boom. We expect exports to accelerate again in the coming months, supported by gains in …
RBA will only ease policy in Q2 next year The Reserve Bank of Australia today signaled greater confidence that inflation will return towards target over the next couple of years, but we still expect the first rate cut to happen only in Q2 next year. As …
The Hang Seng index enjoyed another stimulus-related boost today but we’ve seen similar spikes before. For now, we’d caution against interpreting the latest developments as confirmation large-scale stimulus is on the way, and we still think Chinese stocks …
9th December 2024
A vast share of our clients highlighted geopolitics and/or Trump as their biggest blind spots going into 2025 when polled at our recent London roundtables. Meanwhile, a large majority thought that interest rates will be the key driver of returns next …
New governor may set a new direction for RBI India’s government has just appointed Revenue Secretary Sanjay Malhotra as the new governor of the Reserve Bank of India (RBI). He will replace the Shaktikanta Das following six years at the helm. The …
Fall in inflation gives Banxico room to deliver another 25bp cut The fall in Mexico’s headline inflation rate, to 4.6% y/y in November, combined with the relative resilience in the peso since the US election means that Banxico is likely to press ahead …
The fall of Syria’s President Bashar al-Assad has been warmly received by many, at least outside Russia and Iran, but a key lesson from the other Arab Spring countries is that hopes for a shift towards a liberal, Western-style democracy are likely to be …
When Europe features prominently in client questions it is not normally a good sign. The past few days have been no exception. The immediate concern is France, where the government of Michel Barnier was toppled last week after failed efforts to push …
Leadership alters formal characterisation of monetary policy The Politburo has just concluded its December meeting, which focuses foremost on economic affairs. After 14 years of monetary policy being officially characterised as “prudent”, the meeting …
This page has been updated with additional analysis since first publication. Stimulus is propping up inflation Headline CPI inflation fell but this was mainly driven by easing upward pressure on food prices. Core inflation edged up and PPI deflation …
We think the rally in 10-year Treasuries over recent weeks reflects both the incoming US economic data and changing perceptions towards Trump’s policy agenda. But we don’t expect this rally to continue. The November employment report, released today , was …
6th December 2024
Despite a small rebound in the wake of another solid non-farm payrolls release , the US dollar is broadly unchanged on the week as the recent consolidation phase in currency markets continues. Neither another tariff threat from president-elect Trump (this …
Pick-up in the survey indicators Recent Bank of Canada communications have been keenly attuned to the downside risks to inflation and economic activity, concerns which seemed justified after last week’s disappointing GDP report, which showed third-quarter …
Cut or skip? This week, Governor Christopher Waller signaled support for continuing the loosening cycle, but noted he could favour a pause this month if “our forecasts of slowing inflation and a moderating but still-solid economy are wrong”. While that …
Another twist in Romania’s election rollercoaster Romania’s constitutional court unexpectedly announced today that it will annul the first round of the presidential election , which took place on 24 th November and saw independent far-right candidate, C …
GDP growth picked up in Q3 but timelier data suggest that it has slowed in Q4. We expect growth to remain sluggish next year regardless of whether President Trump raises tariffs on imports from Europe. We also think that inflation will be below 2% in …
Upward trend in consumer confidence continues While the headline University of Michigan Consumer Sentiment Index remains below its average over the first half of the year, the jump in December suggests that household spending growth is likely to remain …
The end of Michel Barnier’s administration after just three months on Wednesday was something of an anticlimax for bond markets as it had already been discounted by investors. Spreads on French bonds have actually narrowed this week. There remains a lot …
Strong employment gain more important for the Bank than jump in unemployment rate We disagree with the market reaction to November's Labour Force Survey, implying that the jump in the unemployment rate makes a 50bp cut much more likely. A slowdown in …
Brazil’s overheating eroding bumper trade surplus Brazil’s Q3 GDP figures released this week showed that the economy is overheating and unbalanced. Consumption and investment growth accelerated compared with Q2. Headline GDP growth was only weaker than …
South Africa GDP miss to be followed by rebound The 0.3% q/q fall in South Africa’s GDP in Q3 was disappointing, but it was largely driven by a slump in agriculture that should unwind. Along with low inflation and continued monetary easing, we expect the …
The government’s new “mission” to deliver “higher living standards…through higher real household disposable income (RHDI) per person and GDP per capita by the end of the parliament” is not ambitious. Real GDP per capita has grown by 1.9% a year on average …
Reversal of disruptions lifts payrolls The solid 227,000 gain in non-farm payrolls in November was driven partly by the reversal of the disruptions that weighed on hiring in October, but still implies that underlying employment growth was a touch stronger …
Prolonged crisis would weigh on the economy The easiest way out of the political crisis that Korea finds itself in would be for President Yoon Suk Yeol to resign. A resignation would trigger a presidential election within 60 days. Given the extent of …
The decision by OPEC+ to delay unwinding some of its oil production cuts until April 2025 appears to have provided food for thought to both oil bulls and bears. In fact, oil prices yo-yoed as news on the decision trickled in, before falling a touch to …
Data released today show that euro-zone household consumption rose strongly in Q3. But slowing real income growth means that we expect spending growth to be subdued in the coming quarters. Meanwhile, investment and exports were weak in Q3 and the outlook …
Rupee at record low belies exchange rate stability On the face of it, the recent moves in financial markets pose a dilemma for the Reserve Bank’s MPC, which earlier today voted to keep the repo rate unchanged at 6.50%. (See here for our initial response …
New rules are more restrictive but leave loopholes The updated US semiconductor export controls published on Monday will further limit China’s ability to manufacture advanced semiconductor chips. The 200+ pages of legislation contain many intricacies, but …
The Reserve Bank of India’s (RBI’s) decision to keep the repo rate unchanged at 6.50% today highlights its unease at the current rate of headline inflation. Admittedly, the lowering of the cash reserve ratio does show that it is turning more concerned …
