Although today’s news about the US labour market disappointed investors, we think it is in line with higher Treasury yields and a rebound in US stocks. The market reaction following the US employment report for August appears to reflect increased worries …
6th September 2024
A week of decidedly mixed economic data has seen the tone shift towards risk-off across financial markets, with safe haven currencies on the front foot and the US dollar staging a bit of a recovery in the wake of today’s weak, but not disastrous, US …
Unemployment rate drops back The 142,000 rise in non-farm payrolls and fall in the unemployment rate to 4.2% confirmed that some of the weakness in July was due to temporary factors, with the number of people on temporary layoff falling by 190,000. That …
That August payrolls report was one of the more keenly awaited data releases in a while – but what do its details suggest about how the Fed is likely to start monetary easing when it meets later this month? On the latest episode of The Weekly Briefing …
The communications from the Bank of Canada this week suggest that the rise in the unemployment rate in August is unlikely to be enough to trigger larger interest rate cuts, which is probably a sign that the Bank is comfortable with the extent of loosening …
Economic growth in the euro-zone slowed in Q2 and timelier data suggest that it weakened further in Q3. That, together with the further fall in wage growth and headline inflation, all but guarantees another 25bpcut at the ECB’s September meeting. But with …
The strength of Brazil’s economy in Q2 means the central bank (BCB) now looks set to raise interest rates, having cut rates as recently as May. Still, monetary tightening is likely to be modest, of around 150bp (to 12.00%), and will end early next year. …
The latest IPF Consensus Survey showed forecasters are finally coming around to our long-held view that retail will preform relatively well over the next five years. Total returns for all the retail subsectors over 2024-28 saw significant upgrades, with …
The lingering concerns over whether the US manufacturing sector and overall economy are heading for recession begs the question of whether the UK’s manufacturing sector and overall economy will go the same way. The fear is that the recent period in which …
Two months after the conclusion of France’s parliamentary elections, we finally know the name of the next prime minister (the fifth since 2020). The good news, at least for France’s creditors is that Michel Barnier, who is a member of the centre-right Les …
Will OPEC+ ever increase output? The big news this week was the decision by some OPEC+ members to extend their voluntary output cuts until December. For context, these producers had originally announced they would begin raising output from next month. …
Unemployment rate heading toward 7% The rebound in employment in August should soothe fears that the economy is taking a turn for the worse, although the 0.2%-point jump in the unemployment rate to 6.6% presents clear upside risks to our forecast that it …
What will the US election mean for Asia's growth outlook? Will China's strength in emerging technology help it overtake the US? Is India doing what is needed to fulfil its growth potential? We’re tackling these issues and more in an Asia roundtable in …
Labour market experiencing slowdown rather than collapse The 142,000 gain in non-farm payroll employment in August was probably just enough to tip the Fed in favour of a measured 25bp rate cut this month, rather than a more dramatic move, but the labour …
Indonesia budget eases fiscal concerns Indonesia’s budget for 2025 moved a step closer to being passed this week after a parliamentary committee and the government reached agreement on the main fiscal targets for next year. (The budget will now be put …
SA GDP rebounds in Q2, surveys muddy the water Data released this week showed that South Africa’s economy picked up in Q2 and, while August’s manufacturing PMI painted a downbeat picture, other key surveys released this week were more positive. On …
Turkish officials expecting a goldilocks rebalancing The medium-term economic programme presented by Turkey’s government this week highlights that policymakers remain committed to orthodox policies to deal with the country’s large macroeconomic …
Growth slowing, but economy still in good shape After all stellar run over recent quarters, data released late last week showed that GDP growth slowed in Q2 (Q1 of FY24/25) to 6.7% y/y, from 7.8% y/y in Q1. (See our initial response to the data here .) …
Governing Council to cut deposit rate by 25bp again next week. Policymakers will point to a gradual easing cycle beyond that. Pace of rate cuts by the Fed will have little impact on ECB. The ECB looks certain to cut its deposit rate from 3.75% to 3.5% …
Even though the PBOC is trying to prop up local government bond yields while the Fed is gearing up to cut rates, we think bonds in China will fare a bit better than those in the US. The PBOC has been flagging for some time that it is uncomfortable with …
This page has been updated with additional analysis since first publication. No respite for German industry The big drop in German industrial production in July adds to the sense that the sector is facing a deep crisis and that, having contracted in Q2, …
This page has been updated with additional analysis since first publication. Modest housing market recovery continues The second consecutive monthly rise in the Halifax house price index in August supports our view that the fall in the Nationwide house …
RBA will need to see more progress on inflation National accounts data released this Wednesday made for grim reading. They confirmed that Australia’s run of sluggish activity continued in Q2, with real GDP rising by a tepid 0.2% q/q for a third …
Regular pay growth hits 32-year high According to preliminary figures for July , regular wage growth jumped from 2.2% y/y to 2.7%, which is where we had expected it to peak in the second half of this year. And an alternative gauge that the Bank of Japan …
The Treasury yield curve has steepened in recent weeks amid growing recession concerns, but we doubt one will materialise this time . We expect the curve to steepen further over the next year or so, with 10-year yields rising and 2-year yields falling. …
5th September 2024
ISM services survey adds little to the 25bp vs 50bp debate Although the ISM services index was essentially unchanged in August, that is still something of a relief following the weak ISM manufacturing report earlier this week and the gloomy tone of the …
The economy looks to be entering a period of below-potential growth, characterised by excess supply in the goods and labour markets. This will keep downward pressure on core inflation, which we think will reach the Bank of Canada’s 2% target by the middle …
The tightening of Brazil’s labour market and pick-up in wage growth over the first half of the year has supported a consumer boom. We expect conditions to cool over the coming quarters but, for now, the buoyant labour market is adding to the central …
Is OPEC+ backing itself into a corner again? The price of oil has slumped even further this week and is now not far off its lowest level in three years. With a potential end to the Libya crisis in sight and our expectation of global oil demand to stay …
OPEC+ to face stick or twist moment at next meeting The recent slide in oil prices, to a 14-month low of $73pb at the time of writing, makes the looming OPEC+ decision on whether to unwind its voluntary production cuts even more of a close call. On the …
We held online Drop-In sessions earlier this week to discuss the outlook for major DM and EM economies and the risks that they face as we look forward to 2025. (See a recording here .) This Update answers some of the questions that we received, including …
The most recent European industrial take-up figures were slightly more encouraging. We expect activity will continue to slowly improve over the next couple of years, supported by the consumer recovery and increasing online penetration, though no return to …
This page has been updated with additional analysis since first publication. Retail sales likely to rise gradually Retail sales edged up by 0.1% in July, and we expect them to rise further in the coming months, though at only a fairly modest pace. The …
Construction activity continues to expand The headline CIPS construction PMI edged back in August, but at 53.6 it remained in expansionary territory for the sixth consecutive month. Moreover, the decline was driven by the volatile civil engineering …
On hold, BNM to leave rates unchanged this year and next Bank Negara Malaysia (BNM) left its overnight policy rate (OPR) on hold (at 3.00%) today, and is likely to be one of the few countries in Asia to leave interest rates unchanged throughout the rest …
Overview – The economy is on the mend and underlying inflation seems to be levelling off around the Bank of Japan’s 2% target. Accordingly, we still expect a final rate hike in October. But as inflation falls below target next year and the spring wage …
While the risks of a more severe downturn in industry have increased in advanced economies, we still expect manufacturing output to slow rather than crash in the coming months. Even if output were to fall sharply, it wouldn’t necessarily have big …
4th September 2024
Although job openings fell sharply in July, the totality of the JOLTS data points to a labour market that continues to normalise, rather than one rapidly deteriorating. That leaves it up to the August Employment Report to determine whether the Fed kicks …
The latest drop in oil prices, coupled with our expectation for global demand to remain weak, will make it practically impossible for OPEC+ to increase output while keeping Brent crude prices above $80pb. Recent reports indicate the group is undecided on …
Following its third consecutive 25bp interest rate cut today, the communications from the Bank of Canada reiterated that further cuts are likely. We expect 25 bp cuts at the final two meetings this year. While Governor Tiff Macklem left the door open to a …
The dynamism of the industrial sector means that market-level outperformance is often only achievable for short periods, because either relative value deteriorates or new supply quickly completes. Houston could be the latest example of that, with recent …
Markets may be gripped by concerns about China’s economic health, but new data from Capital Economics suggests fiscal support is starting to provide a long-awaited boost that could help growth into 2025 as well. However, the country’s longer-term economic …
Another 25bp cut, but little sign the Bank considered a larger move Following its third consecutive 25bp interest rate cut today, the communications from the Bank of Canada reiterated that further interest rate cuts are likely. The tone of the …
Attention at the Forum on China-Africa Cooperation that started today in Beijing will be on the extent to which China can stave off competition from the US to strengthen ties with the region. Relations with China are, for the most part, likely to remain …
Net trade set to weigh on GDP again this quarter The July trade data suggest that net trade will weigh on third-quarter GDP growth, but that is hardly cause for concern when it reflects the continued strength of imports, painting a better picture of …
Trade balance improves, but for the wrong reasons The improvement in the goods trade balance in July was for the wrong reasons, with a fall in imports outpacing a decline in exports. The weakness was due to sharp declines in motor vehicle trade, which …
