House price growth turns positive New home sales jumped in March and house prices increased 0.2% m/m in February. The continued resilience of the housing market means the risk to our forecast of an 8% drop in house prices are now to the upside. But …
25th April 2023
The Hungarian central bank (MNB) slashed the upper end of its interest rate corridor today by 450bp, to 20.50% and, while this move alone won’t loosen monetary conditions, it is likely to be followed by cuts to the effective policy rate (the overnight …
Industrial occupier demand in Spain is set to slow sharply this year and next, as the economy falls into recession. And with both Madrid and Barcelona poised to see a record level of speculative development in the same period, we think Spain’s prime rent …
MNB kickstarts loosening cycle The Hungarian central bank (MNB) slashed the upper end of its interest rate corridor today by 450bp, to 20.50%, and while this move alone won’t affect monetary conditions, it is likely to be followed by cuts to the effective …
There’s little evidence (so far) that the surge in interest rate is leading to widespread debt servicing problems in Chile’s private sector, but there are pockets of vulnerability in the household sector. Although we don’t expect a wave of defaults in the …
EM sovereign debt problems have been thrust back into the spotlight after the latest World Bank and IMF meetings, with promises of a quicker resolution to restructurings in debt-distressed EMs. But can the hurdles that have gummed up debt talks really be …
What do recent data signal about recession risk in the euro-zone? How high will the ECB take the policy rate to rein in inflation pressure? Has March’s bank turmoil had any residual impact on the European banking system? Economists from our Europe and …
More wiggle room for the Chancellor The news that total borrowing in 2022/23 was £13.2bn lower than the Office for Budget Responsibility (OBR) predicted only a month ago provides the Chancellor with more wiggle room to cut taxes and/or raise spending …
More wiggle room for the Chancellor The news that total borrowing in 2022/23 was £13.2bn lower than the Office for Budget Responsibility predicted only a month ago provides the Chancellor with more wiggle room to cut taxes/raise spending ahead of the next …
GDP in Korea rose slightly during the first quarter of the year but we think the economy faces a difficult year ahead as high interest rates and weak external demand weigh on output. According to the advance estimate for Q1 GDP published today, the …
High interest rates and weak external demand to weigh on prospects GDP in Korea rose slightly during the first quarter of the year but we think the economy faces a difficult year ahead as high interest rates and weak external demand weigh on output. Our …
We think that Korea’s economy slipped into recession in Q1 (00.00 BST) UK public sector borrowing probably undershot the OBR’s target in 2022/23 (07.00 BST) We expect US home sales and consumer confidence to paint a weak picture (15.00 BST) Key Market …
24th April 2023
EM central banks have, in general, remained in hawkish mood over recent weeks. Tightening cycles have continued in Mexico, Colombia and South Africa in response to high inflation, while policymakers in Egypt and Pakistan among others have raised …
A fall in consumption this year will weigh on the retail sector, but an earlier correction in yields and rents mean it is less vulnerable to the recession. Indeed, it was the only sector to see a fall in yields in Q1. While some further rise in yields …
Fall in inflation unlikely to be enough to prevent a final 25bp rate hike The fall in Mexico’s headline inflation rate to an 18-month low of 6.2%y/y in the first half of April was broad-based and will provide some comfort to officials at Banxico that …
A note of caution from the Ifo The Ifo Business Climate Index rose again in April but remained in contractionary territory. This is contrast to the PMIs which point to much stronger economic performance at the start of Q2. The small rise in the Ifo …
Weak first quarter, economy to flatline March’s activity data out of Poland were weaker than expected and suggest the economy may now be in a technical recession. Activity may start to bottom out soon, but we don’t think the economy is set for a marked …
A note of caution from the Ifo The small increase in the Ifo Business Climate Index in April confirms that the German economy remained resilient in the face of higher interest rates at the start of Q2. But the survey was much more downbeat than the PMIs, …
According to ECB head Christine Lagarde, it threatens “lasting instability resulting in lower growth, higher costs and more uncertain trade partnerships”. The IMF warns it is “unlikely to achieve progress for all, or to successfully tackle global …
After a positive start to the week on the back of China’s strong Q1 GDP data, commodity prices subsequently eased back on expectations of higher interest rates and worries about demand in advanced economies. OPEC+ members may have been left wondering if …
21st April 2023
The fluctuations following the release of PMI data out of the euro-zone , UK and US look set to leave the dollar broadly unchanged against most major currencies since last Friday. These data – along with evidence in Q1 GDP data of a robust recovery in …
There was positive news for the Bank of Canada this week, as core inflation eased further in March. While our new house price forecasts imply there will be less disinflationary pressure from shelter prices this year than we previously anticipated, the …
Sticky price pressures strengthening hawks’ hand Recently-released inflation figures out of Sub-Saharan Africa’s two biggest economies are likely to put pressure on policymakers in Nigeria and South Africa to raise interest rates further. March CPI data …
We think US GDP grew by 1.8% annualised in Q1 (Thu.) Euro-zone GDP probably rose by a smaller 0.1% q/q (Fri.) We expect the BoJ to abandon Yield Curve Control at Governor Ueda’s first meeting (Fri.) Key Market Themes We think that the more recent …
Once again the PMIs suggest that real activity in advanced economies continues to shrug off the effects of higher interest rates. According to the flash PMIs, GDP and employment growth both got off to a strong start in Q2, even amid the banking sector …
The physical risks facing commercial property are substantial with extreme weather events like floods and wildfires set to increase in both the US and Europe over the coming decades. Property markets have yet to fully price these in, especially in areas …
Brazil’s new fiscal plans: taking a step forward Brazil’s government presented the new planned fiscal framework to congress this week and the expectations are that it will progress quickly to a vote. We covered the framework when it was first announced …
We now expect the Fed to press ahead with another 25bp rate hike at the FOMC meeting early next month but, with the economic data softening and the risks of a debt ceiling crisis rising, we still think the Fed’s next move after that will be a cut. The …
We held an online Drop-In yesterday to present our new financial conditions indices and discuss how conditions have evolved in the wake of SVB’s collapse. (See a recording here ). This Update addresses some of the questions we received, a couple of which …
It’s one of the big questions in markets after March’s banking sector turmoil but the prevailing guides to financial conditions don’t paint a very clear pictures. That’s why Simon MacAdam, our Senior Global Economist, has revamped and relaunched our …
Momentum fading After a strong start to the year, retail sales volumes dropped back in February and the preliminary estimate implies they fell again in March. While consumption probably still rose at a healthy pace in the first quarter, that weakness is a …
The Norwegian krone has been the worst G10 performer against the US dollar by some way in recent months. Though lower energy prices and weakening risk sentiment have likely played a role, we suspect foreign exchange transactions by Norges Bank are also …
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28th April. Register here . While stronger-than-expected data out of Europe and China have weighed on the dollar over …
MNB takes its first steps towards interest rate cuts The deputy governor of the Hungarian central bank (MNB) made a splash this week by signalling that policymakers may cut the upper end of the bank’s interest rate corridor at their meeting next Tuesday. …
Our latest forecasts for the Scandinavian currencies, are for the Swedish and Norwegian currencies to appreciate by 5% and 11% respectively against the euro by year-end, to SEK 10.75 and NOK 10.25. While we think both currencies will strengthen, the …
The stubbornness of CPI inflation in March, which seems more marked than elsewhere (see here ), has left us more comfortable than we were at the start of this week with our view that the Bank of England will raise interest rates by 25 basis points (bps) …
We would not be surprised if US “growth” stocks outperformed their “value” peers by a bit more in the near term. But we still suspect that growth will underperform value substantially over the longer term. That is informed by our view that the valuation …
More signs of economic resilience… GDP data due next week are likely to confirm that, after stagnating in Q4, the euro-zone economy returned to growth in Q1. We have pencilled in a 0.2% q/q expansion in the region as a whole, with positive outturns in …
Supply reviving, but the demand picture remains subdued There were clear signs of a pick-up in global steel production in March, led by China, but output in the EU also ticked up. However, the rise in supply is going hand in hand with increasing stocks. …
Resilience in economic activity continues into Q2 April’s flash PMIs suggest the economy is still proving resilient to the dual drags of high inflation and high interest rates going into Q2. That, alongside evidence suggesting that domestic inflationary …
Goods exports to China have struggled National accounts data published this week show that China’s economy expanded by a faster-than-expected 2.2% q/q in the first quarter – taking output 6.8% higher than during the recent trough in Q2 2022. See our China …
Door remains ajar for further tightening… The minutes of the MPC’s April meeting – in which the committee voted unanimously to keep the repo rate on hold (at 6.50%) for the first time in a year – were published this week. While it has been clear for some …
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28th April . Register here . GDP growth falling short of expectations, but price pressures increasingly broad-based …
Despite soggy sales, outlook for retailers a bit sunnier than it was Underlying retail sales volumes aren’t as soggy as the 0.9% m/m drop in March suggests as some of that fall was due to the unusually wet weather. The further rebound in consumer …
Resilience in economic activity continues into Q2 April’s flash PMIs suggest the economy is still proving resilient to the dual drags of high inflation and high interest rates going into Q2. That, and the uptick in the services output prices balance, …
Strong start to Q2 points to 50bp May hike The further rise in the Composite PMI in April suggests that the euro-zone economy continued to expand at the start of Q2. With price pressures and employment intentions also strong, that adds to the reasons for …
Not as bad as it looks, but higher interest rates to restrain spending The 0.9% m/m fall in retail sales volumes in March (consensus -0.5%, CE -1.0%) probably isn’t as bad as it looks as it was partly due to the unusually wet weather. The further rise in …
Note: We’ll be discussing the BOJ’s April decision and the fate of YCC in a 20-minute online briefing at 09:00 BST/16:00 SGT on Friday, 28 th April . Register here . BoJ will signal inflation target close to being met The Bank of Japan will release …
New Zealand’s housing downturn not over yet According to data released by REINZ earlier this week, the median house price in New Zealand fell by 2.2% in seasonally-adjusted m/m terms in March. With house prices already down by 18% from their January 2022 …
