Having spent the past year worrying over runaway inflation in the major advanced economies, markets are now having to contend with the apparent threat of deflation in China. July’s 0.3% y/y fall in China’s consumer price index and 4.5% y/y drop in …
14th August 2023
Although central banks in both Australia and New Zealand are unlikely to drop their hawkish bias anytime soon, we suspect that their tightening cycles are now over. The RBNZ has already succeeded in sending New Zealand into a recession, which is only set …
With more poor economic data out of China and US yields again threatening to push towards new highs, it is little wonder that the yen and the renminbi have come under renewed pressure. While we still think both currencies will rebound later this year, our …
11th August 2023
This page has been updated with additional analysis since first publication . A strong recovery, but Russia’s economic vulnerabilities are increasing The better than expected pick-up in Russia’s GDP growth in Q2, to 4.9% y/y, confirms that the economy had …
In spite of last week’s weak US payrolls report and this week’s soft CPI data, the dollar has, on net, risen against all other major currencies this week. This may be partly a result of hawkish comments from Fed officials in the aftermath of the CPI …
Natural gas prices were the biggest mover in commodity markets this week, jumping higher on the back of news of potential industrial action at LNG plants in Australia. We don’t think gas prices in Europe are likely to return to their peaks of last year , …
Nigeria’s naira gap evidence of Buharinomics Two months on from the naira’s devaluation, the gap between Nigeria’s official and black market exchange rates is widening again. This suggests that the CBN is, once again, propping up the naira and adds to the …
Falling expectations drag down confidence The University of Michigan consumer sentiment index stalled in August, with the index slipping back to 71.2, from 71.6. With tighter credit conditions and a weaker labour market likely to weigh on confidence …
A fork in the road for Argentina Sunday’s open, simultaneous and compulsory primary elections (PASO) should give a first sign of whether Argentina will buck the regional political trend and shift to the right at the presidential election in October. All …
Inflation and activity data at odds Core price pressures collapsing It might seem a little premature to be celebrating when annual core CPI inflation was still as high as 4.7% in July, down only trivially from 4.8%, but don’t be fooled by the strong …
Although export volumes fell for the second month running in June, the strength of imports suggests that domestic demand is holding up and the Bank of Canada will be pleased to see that import prices continue to fall. Export volumes weak, but imports …
Exports may be weaker than they appear China’s exports fell 14.5% y/y in July, undershooting the analyst consensus. But given the sharp fall in export prices recently, what’s more surprising to us is that export values haven’t fallen even more. On paper, …
Overview – With affordability stretched and the economy slowing, housing market activity is expected to remain weak over the coming quarters. While we expect house prices to lose some of their recent momentum, the worst of the correction appears to have …
The big swings in Treasury yields recently have sent some ripples through the US stock market. This Update sets out how we think this will continue to play out, for the equity market as a whole and across some particularly interest-rate sensitive sectors, …
Where the US leads, the UK often follows. So the evidence of broad-based, rapid disinflation in the US offers some hope for the UK. Indeed, at 7.9%, the UK is still lumbered with a CPI inflation more than twice the US rate (3.2%). At least July’s UK CPI …
Further CEE disinflation keeps rate cuts on track The July inflation data out of Central and Eastern Europe (CEE) this week suggests that our forecasts for interest rate cuts to arrive across the region over the rest of this year, and in early 2024, …
It is not surprising that Italian bank shares slumped this week after the government announced that it is imposing a windfall tax on the banks. The decision seemed to come out of the blue and to have been cobbled together at the last minute with several …
This page has been updated with additional analysis since first publication Inflation rise means Copom won’t increase the size of rate cuts The jump in Brazilian inflation to a slightly higher-than-expected 4.0% last month won’t stop Copom from lowering …
Unemployment rises, real wages fall While Korea’s labour market remains very tight, figures from earlier this week show it is starting to loosen as the downturn in the economy feeds through in to higher unemployment and weaker wage growth. The …
This page has been updated with additional analysis since first publication. Downturn deepens as borrowers hold back China’s bank loan growth fell to its lowest in seven months in July, while broad credit growth dropped to a record low. We expect further …
Upside risks to inflation still remain The RBI kept the repo rate on hold at 6.50% as expected this week and maintained a hawkish tone amid the recent surge in food prices. The Bank revised up its inflation forecast for Q3 significantly (from 5.2% to …
Consumer price inflation slipped into negative territory in July. But this probably won’t last more than a quarter or two and has less to do with the health of domestic demand than many think. Inflation in services, the part of the CPI basket most …
This page has been updated with additional analysis since first publication. Resurgence in activity unlikely to last The 0.5% m/m rise in real GDP in June and 0.2% q/q increase in Q2 (CE, BoE, consensus 0.1% q/q) confirmed that a recession has so far been …
Wage growth & external demand holding up Data released this week showed that overall wage growth remained above 2% for the second consecutive month as a slowdown in regular earnings growth was offset by a strong contribution from bonus payments as firms …
Households continue tightening their belts Earlier this week, we got further confirmation that household spending in Australia is now in freefall. The ABS’ monthly indicator showed that the slowdown in household spending deepened in June. As a …
Banxico continues to sit on the sidelines Mexico’s central bank chose not to follow its peers in the rest of Latin America and begin an easing cycle, leaving its policy rate unchanged at 11.25% at today’s Board meeting. Concerns about the persistence of …
10th August 2023
We think disinflationary pressures will help the Fed pivot to rate cuts sooner than investors expect, giving a boost to “safe” assets this year and next. US CPI data for July, published today, was largely in line with consensus expectations. (See here .) …
With lingering pandemic and energy support measures coming to a close and governments returning one eye to previous fiscal targets, fiscal policy will tighten a little in advanced economies over the coming years. This will contribute to slower growth. But …
We are unconvinced by Christine Lagarde’s claim that the recent strength of employment in the euro-zone is due mainly to labour hoarding and shifts in the sectoral composition of employment. Instead, we suspect it is mainly due to understaffed firms …
Since our last Financial Market Stress Monitor on 13 th May, strains have continued to ease. This abbreviated Stress Monitor takes stock of developments since then. Overall, stress across core financial markets appears about as low as at any point …
Aramco’s profit slump ≠ austerity The slump in the profits of Saudi Arabia’s state oil company, Aramco, in Q2 has focussed attention on the deterioration in the Kingdom’s budget position. But the authorities appear to be taking as many steps as possible …
While China’s latest price reports have markets worrying about deflation, Group Chief Economist Neil Shearing thinks the real issue is what’s happening in core inflation against a backdrop of a struggling economy. He also reviews the “immaculate” July CPI …
Apart from lagging shelter prices, Fed already hit its inflation target The disinflationary pressures continued to build in July, with both headline and core CPI increasing by a moderate 0.2% m/m. Admittedly, the annual headline inflation rate actually …
The stark and unusual contrast between falling credit spreads of high-yield (HY) corporate bonds and rising ones of private-label commercial mortgage-backed securities (CMBS) in the US suggests investors expect the economy there to shrug off lingering …
UK Retail Yield Forecasts (%, 2023-2027) …
Spain Retail Yield Forecasts (%, 2023-2027) …
Germany Retail Rental Value Growth Forecasts (% y/y, 2023-2027) …
France Retail Capital Value Growth Forecasts (% y/y, 2023-2027) …
Table: Industrial Rental Value Growth in Ge, Fr, It, Sp, Nl, Cz, Pl, UK (% y/y) …
France Office Rental Value Growth Forecasts (% y/y, 2023-2027) …
France Retail Rental Value Growth Forecasts (% y/y, 2023-2027) …
Table: Industrial Capital Value Growth in Ge, Fr, It, Sp, Nl, Cz, Pl, UK (% y/y) …
UK Office Capital Value Growth Forecasts (% y/y, 2023-2027) …
Spain Office Capital Value Growth Forecasts (% y/y, 2023-2027) …
Spain Office Yield Forecasts (%, 2023-2027) …
Germany Office Yield Forecasts (%, 2023-2027) …
France Office Capital Value Growth Forecasts (% y/y, 2023-2027) …
UK Retail Rental Value Growth Forecasts (% y/y, 2023-2027) …
Spain Retail Rental Value Growth Forecasts (% y/y, 2023-2027) …
Belgium Retail Rental Value Growth Forecasts (% y/y, 2023-2027) …
