Note: Join our Asia Drop-In on whether China is in a balance sheet recession, the July BOJ meeting and more at 09:00 BST/16:00 SGT on Thursday, 27 th July . Register here . Tax revenue disappoints According to the Bank of Japan’s flow of funds accounts, …
21st July 2023
Bank will revise up 2023 inflation forecast Early signs that virtuous cycle between wages and prices has finally arrived However, widening of tolerance band would risk renewed bond market sell-off At the upcoming meeting, the Bank of Japan will revise …
Aluminium production remains strong but growth is softening Global aluminium production growth eased again in June, in a sign that smelters are responding to weak demand growth. We think that production growth will remain subdued over the next few months …
20th July 2023
As the second quarter US reporting season gets into full swing, it’s easy to lose sight of the big picture: the peak-to-trough drawdown in earnings per share (EPS) from last year has not only been smaller than typically seen in an economic downturn, but …
Saudi-UAE tensions pose a threat to OPEC+ A Wall Street Journal report this week highlighted the tensions between Saudi Arabia and the UAE, which have been simmering for some time. If these persist, one risk is that the UAE will seek to leave OPEC+. The …
Our latest chart pack on the UK commercial property market is embedded below. Higher-than-expected core inflation means interest rates are now set to be higher for longer and we still think the economy will enter a mild recession later this year. That’s …
China’s recent announcement of export restrictions on two metals used to make semiconductors serves as a reminder that China dominates production of metals needed for the green transition. We have warned in the past that the green transition is unlikely …
Mexico’s exports have fared well recently and the current account deficit remains small. But a closer look suggests that the strength of the peso is causing dynamics in the balance of payments to worsen. The Mexican peso has been one of the best …
Sales fall back toward January lows Existing home sales edged lower, dropping by 3.3% m/m to 4,160,000 annualised in June. That decline takes sales back towards the low of 4.0m recorded in January. And despite a marginal pickup in mortgage applications …
This webpage has been updated with additional analysis and charts since first publication. The further fall in inflation in June, coupled with signs of economic weakness and a decline in risk premia, prompted the South African Reserve Bank to leave its …
EM growth will be weaker than most expect over the coming quarters. And with inflation falling back at the same time, the nascent EM monetary easing cycle will broaden out. Strong wage pressures in Latin America and Emerging Europe will limit how far …
CBRT underwhelms again, risks to the lira build The 250bp interest rate hike, to 17.50%, by Turkey’s central bank today once again underwhelmed expectations and the slow and steady tightening is pushing the limits on what policymakers can get away with . …
While the wholesale European natural gas price is now close to pre-energy crisis levels again, we don’t expect EU gas consumption to rise in response. Rather, we think that EU gas consumption has structurally fallen. This is the main reason why we think …
ECB looks certain to raise the deposit rate to 3.75% next week. The September decision will be a close call but another 25bp looks most likely. President Lagarde will stress that rates will remain at the peak for a long time. There is little doubt that …
Egyptian policymakers’ commitment (or lack of) to economic orthodoxy continues to provide cause for concern and, while we don’t share the view that sovereign default is a serious risk, the near-term economic outlook is challenging. Over a longer …
Widespread angst around China’s growth outlook is fuelling a debate about whether the economy is in the kind of “balance sheet recession” that typified Japan’s experience in the 1990s. In our latest briefing on the big macro and market themes in the Asia …
This page has been updated with additional analysis since first publication . Labour market continues full steam ahead With the labour market still running red hot, we think the Reserve Bank of Australia has more work to do. Accordingly, we’re sticking …
More evidence that inflation is falling back in most economies has pushed government bond yields down across developed markets (DMs) over the past couple of weeks. We think that disappointing growth, as well as central banks eventually cutting rates by …
19th July 2023
Despite today’s big reaction in markets in the UK to better-than-expected inflation news , we still think investors are overestimating the peak in interest rates there and underestimating how much monetary policy will be eased in 2024 and beyond. Indeed, …
25bp rate hike next week likely to be the last, with rates peaking at 5.25%-5.50% Run of better inflation data to convince Fed to scrap plans for further hikes Falling inflation and weaker economy will see rates cut to 3.25%-3.50% by end-24 Fed officials …
Single-family starts fell from previous month’s highs, but remain strong Single-family starts fell back from their 11-month high in June, but remained substantially above the average seen in 2023 thus far as homebuilders remained optimistic. However with …
We have made only minor changes to our latest global forecasts which still imply that property will underperform other assets in the short to medium term. Further out real estate returns are set to recover, but, with yield spreads more compressed than in …
We still think the economy is more likely than not to fall into a mild recession later this year, as higher interest rates remain a drag and credit conditions continue to tighten. With the labour market proving resilient and core inflation still much too …
Table 1 has been updated to include the latest comments and proposals of the candidates. The latest polls ahead of next month’s primaries in Argentina suggest that the country could buck the regional trend by electing a more market-friendly government. In …
Lower energy prices and the reinstatement of the EU’s fiscal rules will contribute to lower budget deficits in the euro-zone next year. Together with tighter monetary policy, this will help to dampen inflationary pressures and to reduce GDP growth. Over …
One way in which EMs may benefit from the fragmentation of the global economy into US- and China-aligned blocs is via “friend-shoring”. There appears to be evidence that the US is importing a higher share of goods from EMs, mainly Vietnam, Taiwan, Mexico, …
The lower-than-expected CPI inflation data for June probably signals the end of the upward march in mortgage rates. But mortgage rates are likely to plateau rather than fall as the Bank of England keeps interest rates high until next summer and lenders …
Weakness in May looks set to continue The worse-than-expected South African retail sales figures for May add to the raft of weak activity data and it looks like things may get even worse over the coming months. Coupled with figures earlier today showing …
Despite the softer tone of the CPI inflation data for June released earlier today, we have raised our forecast for the peak in Bank Rate. Rather than rise from 5.00% currently to a peak of 5.25%, we now think Bank Rate will peak at 5.50%. That’s a bit …
The latest data suggest that the euro-zone remained in recession in Q2. We think that the economy will continue to contract in the second half of the year as the impact of tighter monetary policy feeds through. Construction data for May were published …
Rate hikes from the Federal Reserve and European Central Bank at their July meetings look like done deals – it’s the messaging accompanying those decisions that may prove key to what the banks decide to do in September and beyond. Another increase also …
Drop in inflation means SARB to stand pat tomorrow The larger-than-expected fall in South Africa’s headline inflation rate to 5.4% y/y in June brings it back within the Reserve Bank’s 3-6% target range for the first time since April 2022 and means that …
India's economy is showing signs of coming off the boil and, with inflation lodged within the RBI’s target range, a resumption of the tightening cycle looks unlikely. However, the onset of a severe El Niño is a looming threat and presents a key risk to …
Mortgage rates have risen to a level that could cause costs on a fifth of rental homes to exceed the rent. That is likely to lead to a significant number of forced rental property sales, which will undermine the tight supply conditions that have limited …
Provisional data from the Australian Bureau of Statistics suggest that consumer spending slumped in Q2, as households sharply pared back discretionary expenditure. Faced with falling real incomes and depleted savings buffers, we think households will only …
This page has been updated with additional analysis since first publication. Note: We’ll be discussing the UK inflation, growth and policy outlook in 20-minute online briefing at 9am BST today. Register here . Some good news, but we’re still raising our …
This page has been updated with additional analysis since first publication. Headline inflation moderates, but underlying inflation remains elevated Although price pressures are dissipating, they could prove stickier on the way down than we anticipate. As …
Rebound in sales spreads to pre-construction sector The pick-up in existing home sales this year has spread to the pre-construction market, with new home sales in Toronto rebounding strongly. Together with the surge in housing starts in June, that …
18th July 2023
All is well in the US economy – at least according to financial markets. But we think investors are underestimating the chance of an economic slowdown. The mixed news in the US retail sales and industrial production data, released today, didn’t seem to do …
The blow to Nigeria’s economy from a failed demonetisation exercise is fading but there are already signs that the inflationary effects of the devaluation of the naira and removal of fuel subsidies are weighing on activity. We expect near-term GDP growth …
Here are answers to some of the key questions that kept coming up during meetings with clients last week in New York and Chicago, and around my presentation to the NCREIF summer conference in Chicago . How bad will it get for offices? Our forecast for …
Manufacturing malaise set to continue The further slump in industrial production in June illustrates that some parts of the economy are already struggling and, as global manufacturing demand continues to soften, we expect further weakness in the second …
The widely-differing impact of El Niño across continents means that the net effect on global mining output is not clear cut. On balance, though, the likelihood is that it will lead to lower ore output, particularly of copper, and that it will be a factor …
Not as good as it looks This page has been updated with additional analysis since first publication. On the face of it, the sharper-than-expected fall in headline inflation to 2.8% in June and the only modest 0.1% m/m seasonally adjusted rise in the CPI …
Underlying sales better than muted headline gain suggests Despite the modest 0.2% m/m rise in headline retail sales in June, the bigger 0.6% m/m gain in underlying control group sales is a bit more encouraging, although second-quarter consumption growth …
Note: We’ll be discussing the UK inflation, growth and policy outlooks after the June CPI release on Wednesday 19 th July. Register here to join that 20-minute online briefing. Splitting real GDP growth into the sectors most and least sensitive to …
Swiss inflation has fallen sharply this year to below 2% and we expect it to stay there for the foreseeable future. In contrast to the SNB’s view, we think second-round effects on wages will be quite limited. And as a result, we forecast the SNB to start …
