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 …
19th April 2023
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 …
20th April 2023
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 …
Bank Indonesia (BI) today left interest rates unchanged (at 5.75%), and appeared to signal that further rate increases this year were unlikely. With inflation falling and growth easing, we expect interest rates to be left on hold for the remainder of the …
So far at least, that’s what we’ve seen. CMBS spreads have blown out, with option-adjusted spreads on triple-B CMBS rising from just over 300 basis points in early 2022 to more than 900 bps last week. Simultaneously, anecdotal evidence suggests lenders …
On hold for the rest of the year Bank Indonesia (BI) kept its main policy rate unchanged today (at 5.75%), and appeared to signal that further rate increases this year were unlikely. With inflation falling and growth easing, we expect interest rates to be …
Wage growth eases further, but slowly The labour market became a bit less tight in February and wage growth continued to ease, albeit slowly. That leaves the Bank of England with a tough call on whether to raise interest rates further. Tomorrow’s release …
Wage growth easing albeit slowly The labour market became a bit less tight in February and wage growth continued to ease, albeit slowly. That leaves the Bank of England with a tough call on whether to raise interest rates further. Tomorrow’s release of …
Inflation concerns will prompt a final 25bp rate hike in May The minutes of the RBA’s April meeting reinforce our view that the decision to leave rates on hold did not signal an end to the Bank’s tightening cycle. Indeed, the Board did discuss the case …
This page has been updated with additional analysis and charts since first publication. Growth on course to hit 6% this year GDP rebounded more quickly than expected in Q1 thanks to a rapid return to normality following last year’s virus disruptions. …
China’s Q1 GDP data may show robust q/q growth (03.00 BST) We expect Indonesia’s central bank to leave policy unchanged (08.20 BST) Sign up here for our Drop-In on China’s post-lockdown recovery (09.00 BST) Key Market Themes Q1 earnings reports from US …
17th April 2023
While US equity REITs are a long way from discounting the “best of times” for US commercial real estate (CRE) over the coming quarters, listed real estate stocks in Europe appear braced for something not far off the “worst of times”. That is a difference …
As the dust settles on March’s banking sector turmoil, there’s intensifying focus on how credit is being affected by heightened fear. But, with lags in data and established market indicators giving only partial views, are investors getting a clear picture …
The increasingly diverse array of creditors to debt-distressed EM governments – and the difficulties in getting China and Western lenders to see eye to eye – is already gumming up sovereign debt restructurings. And despite some positive noises from the …
Recent events have highlighted that meeting regulatory capital and liquidity requirements does not guarantee that banks will be financially stable. The forthcoming EU bank stress test results should give a better idea of the banks’ health, but those tests …
March’s net commercial real estate (CRE) lending slowed sharply following SVB’s collapse early in the month. Lending against multifamily fell for the first time in 18 months, driven by a reduction in small banks’ exposure. Along with a softening in …
A higher corporate tax would reduce corporate sector surpluses and could stimulate demand if the additional revenue were used to finance higher public spending or transfers to households. But the tax would have to be raised to implausibly high levels to …
Shift towards cheaper homes challenges statisticians The divergence between the Nationwide and Halifax House Price Indices (HPIs) of late has cast some doubt on the direction of house prices. A struggle to adjust the statistics for a shift towards cheaper …
Central banks in Australia and New Zealand have taken starkly different approaches to managing the inflation-unemployment trade-off in their countries. Despite being behind the curve on interest-rate hikes relative to other advanced economy central …
Neil Shearing Group Chief Economist The acute phase of last month’s banking crisis — which some, channelling the US College Basketball tournament, have dubbed “March Madness” — has passed. The sense of panic has abated and markets have calmed. Measures …
Bank of Canada Governor Tiff Macklem used his press conference this week to push back against expectations for interest rate cuts later this year. That partly reflects the Bank’s less downbeat assessment of the economic outlook, but the nascent rebound in …
14th April 2023
Despite a bounce today, the US dollar is set to end the week lower against most currencies and around its weakest level, in aggregate, in a year. This partly reflects that, even though Treasury yields are set to end the week higher following today’s …
UK headline CPI probably fell in March, though core pressures remain strong (Wed.) We expect the PBOC to keep its 1-Year Loan Prime Rate on hold next week (Thu.) Flash PMIs for the euro-zone may point to a continued expansion in April (Fri.) Key Market …
Overview – We have made substantial downgrades to our metro-level forecasts this quarter. The outlook for office-based employment growth has been hit by tech sector struggles, weighing on demand in many western markets. We have also pushed through bigger …
The strength of the March CPI data may be enough to persuade the Fed to squeeze in a final 25bp rate hike at the early-May FOMC meeting. But with mounting evidence that economic growth is weakening again, we doubt that strength will last much longer. Core …
Commodity prices received a boost from expectations that the Fed is nearing the end of its tightening cycle and the weaker US dollar this week, but we think that it is only a matter of time before the economic slowdown we forecast in developed economies …
The outlook for economic activity remains poor due to the impact of high inflation, tight monetary policy and weak external demand. Sweden is already in a recession, not least thanks to the slump in its property sector. And while Norway and Switzerland …
Lula’s 3.0: an inauspicious start Brazil’s president Lula marked his first 100 days in office this week and, while there’s been a bit more enthusiasm from investors for Brazilian assets in the past few days, there hasn’t really been much for investors to …
Glimmers of hope have emerged this week about unlocking the stalemate over the global debt restructuring framework, with encouraging signs for negotiations in Zambia and Ghana. But we fear that the measures considered are more of a workaround that don’t …
Further evidence of fading economic momentum The 0.5% m/m fall in manufacturing output in March provides more evidence of a loss of economic momentum going into the second quarter. While the return of temperatures to seasonal norms last month appears to …
How will the ructions in the banking sector be reflected in the data? Tracking the credit impact of March’s events isn’t as straightforward as it appears, says Group Chief Economist Neil Shearing . He talks to David Wilder about how to cut through the …
Manufacturing outlook remains challenging After a bright start to the year, manufacturing activity weakened in February. While that was partly due to temporary factors that are likely to be quickly reversed, the surveys point to a challenging outlook. The …
Global sugar prices have surged by over 20% since the start of the year as production estimates in several key producers have been downgraded. We think the supply picture is unlikely to change by much over the next months and will keep prices elevated. …
Sales saved by online strength Retail sales fell by 1.0% m/m in March, adding to the evidence that the strong start to the year was partly due to the unseasonably mild winter weather. With control group sales only falling by 0.3% m/m last month, …
Note: Join our Tuesday 18 th April online briefing discussing what China’s Q1 “data dump” tells us about the strength of the country’s reopening recovery. Register Now . The rebound has exceeded most expectations Mixed data have contributed to differences …
Further evidence of fading economic momentum The 0.5% m/m fall in manufacturing output in March provides yet more evidence of a significant loss of economic momentum going into the second quarter. While the return of temperatures to seasonal norms last …
Surge in household incomes unlikely to be sustained The UK economy has continued to be more resilient to the twin drags of higher inflation and higher interest rates than we thought. Real GDP was flat in February despite an extra drag from the strikes. …
Financial market strains have eased over recent weeks, though some pockets of uncertainty remain and our sense is that the risk of further problems emerging in the coming months remains high. Since the forced takeover of Credit Suisse by rival UBS three …
Sales boosted by online strength Retail sales fell by 1.0% m/m in March, adding to the evidence that the strong start to the year was partly due to the unseasonably mild winter weather. With control group sales only falling by 0.3% m/m last month, …
