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 …
21st April 2023
Reopening boost to services not tapped out yet The Q1 GDP figures published earlier this week exceeded even our relatively upbeat expectations, helping to settle some of the debate over the strength of China’s recovery. In response , we revised up our …
Exports downturn could prove short-lived April’s flash PMIs point to further upside risks to our GDP forecasts, indicating a broad improvement in both domestic and external demand. That suggests the exports downturn may be short-lived. Meanwhile, services …
Stronger yen, falling commodity prices to cool decades-high inflation Underlying inflation saw a sizeable increase in March, while headline inflation inched down thanks to falling energy prices. A stronger yen and falling import price inflation should …
Retail sales volumes in the UK probably fell in March (07.00 BST) We think the Composite PMI for the euro-zone remained unchanged in April… (09.00 BST) … while PMIs in the US and UK edged down Key Market Themes We think Fed Chair Powell was right to …
20th April 2023
The economic impact of the Oxford malaria vaccine, which has now been approved by regulators in Ghana and Nigeria, will depend on the pace and breadth of the rollout and how long immunity lasts for. But it could potentially have a large positive impact on …
Sales continue weak start to the year Existing home sales edged lower in March rounding off the weakest start to the year in over a decade. While the lending data point to further declines in April, we expect mortgage rates will fall back to 5.75% …
Julian Evans-Pritchard , our Head of China Economics, talks to Steven Altman , Director of the DHL Initiative on Globalization at NYU Stern’s Center for the Future of Management, about what lies ahead for globalisation in an age of economic fracturing. …
Large current account deficits across CEE have started to narrow in recent months and we think that this will continue as slowing economies and lower energy prices shrink import bills. This will reduce vulnerabilities, but external risks and currency …
We expect rising interest rates and structural headwinds to trigger a deep rout in commercial real estate. The impacts on the real economy will be mostly indirect via the impact on small bank lending, however, rather than the direct impact on …
Norsk Hydro strikes will weigh on European aluminium output Global production growth y/y slowed in March and came close to stalling. In fact, excluding China, global production growth was 0%. These latest data are consistent with our view that output …
Aramco transfer accelerates under Vision 2030 plan Saudi Arabia’s government transferred a further 4% of Aramco to the Public Investment Fund (PIF) this week as part of its efforts to diversify its revenues away from oil as part of Vision 2030. But there …
Listed markets in Europe have been surprisingly downbeat about prospects for real estate relative to other regions. While we think that largely reflects mis-pricing in equity markets, it provides a reminder of the potential downsides as long as the …
India is benefitting from maintaining its historic unaligned stance in tensions between the US and Russia. Since the start of the war in Ukraine, India has been ramping up oil imports from Russia to take advantage of discounted prices. (See Chart 1.) And …
ECB account consistent with further rate hikes The account of the ECB’s last policy meeting, which took place just days after the collapse of Credit Suisse, confirms that it was only the banking sector turbulence that deterred policymakers from …
As the new Bank of Japan Governor prepares to chair his first policy meeting, the future of the Yield Curve Control policy is again in focus. Will Kazuo Ueda bring continuity or change? Marcel Thieliant , who leads our Japan coverage, Japan Economist …
As mortgage lenders’ net interest margins are already very narrow, the increase in market interest rates over the past fortnight means that the decline in mortgage rates from their spike after the “mini” budget is now over. It was unusual for swap rates …
This page pulls together relevant highlights from our global commercial real estate analysis, including why we think the recovery will be slower than in other cycles and why US office values will not recover their pre-pandemic peaks until at least 2040. …
PMIs suggest exports downturn may be short-lived April’s flash PMIs point to further upside risks to our forecasts, pointing to a broad improvement in both domestic and external demand and suggesting that the exports downturn will be short-lived. …
Lower import price inflation will tame underlying inflation March data were very much in line with the Tokyo CPI. Underlying inflation saw a sizeable increase in March, while headline inflation inched down thanks to falling energy prices. A stronger yen …
The recommendations by the RBA’s review panel unveiled today were broadly in line with what we had anticipated. While the 2-3% inflation target will be retained, sweeping changes to the Bank’s leadership structure are underway. And with a lot of the …
The trade deficit narrowed in March as import values fell faster than export values. Data for Q1 so far are still consistent with a negative contribution from net trade to GDP. Export values surprised analysts to the upside, rising by 4.3% y/y in March …
Inflation is coming off the boil Although inflation in Q1 was below what the RBNZ had expected, we don’t expect the Bank to take its foot off the brakes just yet. Indeed, with non-tradables prices continuing to rise at a rapid clip, the RBNZ is likely to …
Price pressures show signs of easing Amid ongoing concerns that non-tradables inflation will settle at an uncomfortably high level, we still expect the RBNZ to push ahead with one final 25bp rate hike in May. The 1.2% rise in consumer prices last quarter …
Housing past the worst, but risks remain House prices edged up in March and the jump in the sales-to-new listing ratio implies they will rise further this quarter. With affordability still very stretched, we assume that there will be a renewed period of …
19th April 2023
Crude production approaching peak Sharply higher refining activity and a rise in exports drove commercial crude stocks lower this week. Meanwhile, US production was stable. We think it will only rise a little further by the end of the year. The EIA’s …
We think price pressures remained elevated in New Zealand in Q1 (22.45 BST) Sign-up here for tomorrow’s Drop-in on our revamped financial condition indices… …and here to catch up on yesterday’s Drop-In on China’s post-lockdown recovery Key Market …
The recent undershooting of CPI used vehicle prices relative to wholesale auction prices appears, at least partly, to reflect a squeeze on dealer margins as demand has cooled. The upshot is that we shouldn’t necessarily expect the CPI measure to catch up …
Our dataset on inflation expectations across EMs shows some encouraging falls recently and supports our view that, with EM inflation likely to fall further, monetary easing cycles will start in the coming months. However, inflation expectations remain …
We think euro-zone equities will struggle as the region’s economy weakens more than investors expect. Euro-zone equities have continued their strong year-to-date gains this month, with the short-lived dip on the back of the banking turmoil now fully …
Contraction in industry suggests Q1 was another weak quarter Brazilian industrial production fell for a third consecutive month in February and, while the latest surveys suggest that industry held up a bit better in March, the bigger picture is that Q1 …
This Update was originally published on 19 th April. We have updated the data, charts and text to reflect the growing divergence between inflation in the UK and elsewhere evident after today’s release of the UK inflation figures for May. Clients can read …
We think investors’ expectations for the Fed funds rate will fall a little by the end of this year, which will push the 10-year Treasury yield a bit lower by end-2023. But we doubt lower “risk-free” rates would be enough to prevent a sharp drop in the S&P …
Romania's economy has outperformed its peers in Central and Eastern Europe (CEE) over the past year, but domestic demand looks unsustainably strong and a period of weaker growth will be needed to reduce the large current account deficit. We forecast the …
South African economy closer to technical recession February’s weak hard activity figures out of South Africa suggest that stronger data from January were a blip and, following a contraction in GDP in Q4, increase the chances that the economy has slipped …
The Riksbank will raise its key policy rate by another 50bp next week, bringing it to 3.5%, and we think a final 50bp increase is most likely in June. Policymakers sounded pretty hawkish at the February meeting and incoming data since then have …
Our in-house demand proxies for industrial metals picked up at the start of 2023, which is consistent with China re-opening and resilient macroeconomic data in most advanced economies. What’s more, we suspect that growth will have accelerated in …
Exhausted household savings and an upcoming recession is set to hit hotel demand over the next year or so. However, as happened in the aftermath of the GFC, some stretched households may decide to take a domestic holiday instead of a foreign one. We doubt …
Core inflation remains high Final inflation data confirmed that the drop in headline inflation in March was entirely due lower energy inflation. With the core rate not yet passed its peak, we think the ECB will raise rates to a peak of 4%. Data published …
Latest pick-up in inflation strengthens hawks’ case South Africa’s headline inflation reading for March came in stronger than expected, at 7.1% y/y, and core inflation remains uncomfortably high for policymakers at the Reserve Bank. With persistent …
Preliminary volume data confirms Q1 drag from net trade The trade deficit narrowed in March as import volumes fell faster than export volumes. Data for Q1 so far are still consistent with a negative contribution from net trade to GDP. Export values …
Fight against inflation is lasting longer than expected Plunging energy price inflation will soon drag down CPI inflation more significantly, but the stubbornness of core inflation suggests that the fight against inflation is lasting longer than the Bank …
Stubborn core inflation points to one more rate hike…at least The smaller-than-expected fall in CPI inflation in March, from 10.4% in February to 10.1% (consensus/CE 9.8%, BoE Feb MPR 9.2%) and the stubbornness of core inflation, which stayed at 6.2% …
UK headline CPI probably fell in March while core pressures remained strong (07.00 BST) See our revised and expanded Financial Conditions Indices for advanced economies here Catch up on today’s Drop-In on China’s post-lockdown recovery here Key Market …
18th April 2023
Slow recovery in construction activity Single-family starts rose for the second consecutive month in March which adds weight to the view that starts have bottomed out. Building permits and homebuilder confidence also edged higher. But stretched …
Base effects helped to pull headline inflation lower in March, but there were also encouraging signs in core inflation, as the average three-month annualised gain in CPI-trim and CPI-median fell to a 16-month low. We continue to expect headline and core …
Core inflation pressures continue to ease While base effects helped to pull headline inflation sharply lower in March, there were also some encouraging signs in core inflation, as the average three-month annualised gain in CPI-trim and CPI-median fell to …
Note: We discussed our revamped FCIs and took your questions on global financial conditions in a 20-minute online briefing on Thursday, 20 th April . Watch the recording here . We have revamped our financial conditions indices (FCIs) for advanced …
