Consensus on ECB Governing Council points to 25bp cut next week But we expect policymakers to step up the pace of cuts next year… …and think the deposit rate will be just 1.5% by the middle of the 2025 While there is a strong case for the ECB to …
5th December 2024
We think that the shift in the shape of consumer spending over the past few years away from spending on goods towards spending on services is here to stay. While the recent strength in spending on housing rents may not persist, over the next couple of …
Retail sales lose momentum October’s decline in euro-zone retail sales followed a good third quarter for retailers. We suspect that the strength in sales in Q3 was just a one off and that growth will be subdued in the coming quarters. The 0.5% m/m fall in …
Jump in commercial activity supports a rise in the headline balance The headline CIPS construction PMI increased to 55.2 in November, from 54.3 in October, indicating an expansion of construction activity. The rise was entirely driven by the commercial …
After raising interest rates for the first time in 17 years in 2024, we think markets are underestimating just how far the Bank of Japan will go to continue tightening monetary policy in the coming year. Our Japan and Markets economists held this special …
Riksbank will be unfazed by rise in inflation While all three key measures of inflation in Sweden rose in November, this does not change the underlying story that inflation is around its target level and is likely to stay there over the next year. CPIF …
GDP growth has disappointed, but outlook is brighter Core inflation has surprised to the upside of Bank’s forecasts Still a case for another 50bp move, but Governing Council likely to favour 25 bp Although the recent GDP data disappointed, there are green …
4th December 2024
The incoming Trump administration’s proposed crackdown on immigration means labour force growth is likely to slow toward zero. That would pull down potential GDP growth to less than 2% and labour shortages would contribute to increased inflationary …
ISM services index drops back to three-month low The fall in the ISM services index to 52.1 in November is not too concerning, given it was driven partly by a slump in the supplier deliveries index, but it does lend some support to our view that GDP …
NBP leaves rates on hold, little scope for easing in 2025 The National Bank of Poland (NBP) left its policy rate on hold again today, at 5.75%, and a rise in inflation over the coming months means that the monetary easing cycle won’t resume until the …
Purchasing activity rebounds despite higher borrowing costs The rebound in purchase mortgage applications in November shows that there were some signs of life in the market, despite the return of 7% mortgage rates. But taking a step back, activity remains …
Paris retail rents surged in Q3 raising hopes for a sustained revival. But this jump probably reflects a temporary boost from the Olympics and momentum is expected to fade next year. Despite this, we think the French capital will slightly exceed euro-zone …
President Yoon Suk Yoel has rescinded his declaration of martial law, but Korea’s political crisis is far from over. The opposition are now trying to impeach the president, while financial markets remain volatile. This Update answers five key questions on …
The RBA will leave interest rates unchanged at its upcoming meeting on 10 th December. While the weakness in economic activity points to rate cuts before long, we think the Bank will need to see clearer evidence that the labour market is loosening and …
This early edition of the Capital Daily outlines our initial thoughts on the market implications of the political drama in Korea. Rarely does a combined sell-off in a country’s stocks, bonds, and currency feel like a relief rally. But the situation in …
Weak activity points to RBA easing policy before long GDP growth remained sluggish in the third quarter, adding to the case for the RBA to start easing policy before long. The 0.3% q/q rise in GDP in the third quarter was a touch weaker than the analyst …
The probable imminent collapse of the French government is not having much impact on bond markets elsewhere in the euro-zone. And we think contagion risks will remain limited, as long as the monetary union itself is not called into question. One of the …
3rd December 2024
While energy market fundamentals point to oil prices falling a bit further and prices of European natural gas and Asian LNG remaining higher than before the Russia-Ukraine war, the uncertain geopolitical backdrop is a major wildcard for energy markets. Of …
The rebound in job openings in October suggests that labour market conditions are stabilising at a healthy level. Meanwhile, despite a small rebound in the private quits rate, it still points to wage growth slowing sharply. The rebound in job openings to …
President Yoon Suk Yeol’s declaration of martial law – and parliament’s vote to reverse it – has plunged Asia’s fourth largest economy into crisis and triggered turmoil across South Korean financial markets. On 4th December our economists held a special …
Our Long Run Returns Monitor provides our updated long-term projected returns for major asset classes. All projections in this publication are as of 29th November 2024. We publish more detailed explanation of our views in our annual Long Run Asset …
The declaration of martial law by Korea’s president is an extraordinary step that seems likely to trigger either the suspension of Constitutional democracy in Korea or the president’s own rapid impeachment and removal. For investors the key question is …
The main presidential candidates and their parties in Ghana’s upcoming election appear to be committed to restoring fiscal discipline and getting inflation under control. That said, the opposition NDC, which currently appears on course to take power, is …
Tight supply conditions will drive a solid rent outlook for the student housing sector over the next year. But the bigger picture remains one of slowing demand as steady declines in the college-age population and curbs on immigration provide a substantial …
An interactive guide to the fiscal sustainability challenges faced by euro-zone economies. This content was last updated on 20th January 2025. If you have subscriber access to this data, you can download it via the menu options in the top right of …
Note: We’ll be discussing the French budget crisis in a Drop-In on Tuesday, 3rd December at 1000 ET/1500 GMT . Click here to register for the 20-minute online briefing. France is unlikely to have a government with a mandate to tighten fiscal policy …
Although the Republicans completed a clean sweep in the recent election, we are sceptical that this opens the door to additional fiscal stimulus. We do expect the original Trump tax cuts, which are due to expire at the end of next year, to be extended. …
Another strong quarter points to larger Selic hike The strong 0.9% q/q expansion in Brazil’s GDP in Q3 will add to the central bank’s concerns that the economy is running too hot. Alongside rising inflation and the sell-off in local financial markets in …
Gulf ending the year on a stronger note November’s batch of PMIs showed an increase all of the Gulf economies, although there remained some underlying signs that non-oil activity is softening. Elsewhere, Egypt’s PMI improved a touch as price pressures …
Surprise contraction, but things not so bad under the hood South Africa’s economy recorded a surprise contraction of 0.3% q/q in Q3, but that was largely due to a steep decline in agricultural output. The rest of the economy held up much better and we …
This page has been updated since publication with additional analysis. Rise in inflation will prove temporary The uptick in Swiss inflation in November is likely to prove short-lived and should not prevent the SNB from cutting interest rates again in …
Rate cut in December may be jumping the gun The smaller-than-expected decline in Turkish inflation in November, to 47.1% y/y, suggests to us that a monetary easing cycle probably won’t start later this month as many analysts seem to be expecting. We …
Overview – We now expect inflation excluding fresh food and energy to remain above the Bank of Japan’s target for most of next year as the yen remains weak for longer and the upcoming spring wage negotiations result in another sizeable pay hike. …
The French government is on the brink of collapse, the country’s fiscal situation continues to deteriorate and its bonds are trading like their Greek counterparts. Is this the next euro-zone debt crisis? Andrew Kenningham, our Chief Europe Economist, and …
2nd December 2024
What’s the outlook for struggling German auto manufacturers? How big a threat do Donald Trump and Chinese imports present? What are the macroeconomic implications of this industry’s travails? Chief Europe Economist Andrew Kenningham held an online …
Our US Housing Market Chart Pack has been updated with the latest data and our analysis of recent developments. Conditions for would-be homebuyers and sellers will not improve much in the near term, with mortgage rates set to remain around 7% through the …
President-elect Trump’s latest tariff threat, this time against the “BRICS” economies, is another early taste of his combative approach to trade policy and its potential impact on financial markets. The chance of a BRICS currency (or another alternative) …
The latest PMIs show that while China’s manufacturing sector is benefiting from a fiscal boost, industry in most of the rest of the world continues to struggle. With demand weak and little disruption on the supply side, indicators of goods price pressures …
The pick up in the aggregate EM manufacturing PMI in November was largely driven by China. Elsewhere, manufacturing activity looks as though it will remain relatively soft into next year. The surveys suggest that goods price pressures picked up last …
Despite the recent upward revisions to our forecasts for the US dollar and Treasury yields, we still think the gold price will rise to $2,750 by end-2025. This reflects our view that stronger gold demand from China and broader concerns about fiscal …
This page has been updated with additional analysis since first publication. Post-disruption rebound can’t hide weakness The rebound in the ISM manufacturing index in November was as expected following recent hurricanes and the end of the Boeing strike, …
It’s the season for the usual avalanche of reports looking ahead to the coming twelve months. Over the coming days and weeks we will publish our macro and market Outlook reports, which will provide in-depth analysis and comprehensive forecasts across our …
Unemployment rate set to rise next year With the unemployment rate unchanged at 6.3% in October, the euro-zone labour market appears to be holding up reasonably well. However, this looks set to change in the coming months as the outlook for economic …
Central Europe continues to struggle The PMIs fell deeper into contractionary territory in Poland and Czechia last month, adding to the disappointing run of activity data out of Central Europe. In contrast, the PMIs rose in Turkey and Russia. And an …
We now think the 10-year JGB yield will rise further, the yen will make more ground against the US dollar, and Japan’s equities will struggle to make much headway (in yen terms). Inflation in Japan looked, only a couple of months ago, to be firmly on the …
Centre-left comes out on top, but fragmented coalition likely The centre-left Social Democrats (PSD) – the largest party in Romania’s current coalition – look set to win the most votes in the parliamentary election which took place on Sunday, but strong …
