Revisiting the energy price cap The Australian government revealed details of its energy price cap on Friday and there are two points worth making. First, the $125 cap on coal prices refers to a lower-grade type of coal than we had thought, which means …
16th December 2022
Is the CBE eyeing up another surprise meeting? The IMF’s Executive Board meet on Friday to approve Egypt’s deal, and there are rumours the Central Bank of Egypt (CBE) could meet today to deliver a surprise aggressive interest rate hike. The CBE is …
15th December 2022
The Bank of Canada’s 50bp rate hike this week means that variable mortgage rates are now more than 400bp higher than the start of the year. This raises the risk that some will be forced to sell their homes, although there was little evidence of …
9th December 2022
SA’s politics, Eskom, growth and debt conundrum South Africa’s political upheaval took a breather this week but fears about the state electricity company, Eskom, have grown. Problems at Eskom not only pose a threat to economic activity but, if left …
Political chaos rattles Peru It’s been a tumultuous week in Peru that culminated in the ousting of left-wing President Pedro Castillo on Wednesday after he attempted to stage a “self-coup”. He was arrested on charges of rebellion and conspiracy (and …
Fiscal policy coming back to life Fiscal policy has not played much of a role supporting the economy this year. A large part of the blame lies in an inflexible budget process that makes it hard for the finance ministry to depart from limits set in …
Fed could be upstaged by CPI data The Fed is used to holding centre stage, but next Wednesday’s policy announcement could end up being overshadowed by the November CPI data, due for release on Tuesday. If we’re right and core prices increased by another …
Hungary’s fuel crisis reaches breaking point Hungary’s government was forced to abandon its cap on petrol and diesel prices earlier this week as fuel shortages intensified across the country. The cap had been introduced at the end of last year and has …
If you haven’t started your Christmas shopping, you may not be alone. Both the CBI Distributive Trades Survey and the CHAPS spending data point to a fall in retail sales volumes in November. The BRC/KPMG Retail Sales Monitor, which has a somewhat …
Wage growth peaking? Policymakers at the ECB will have taken some heart from the latest wage data published by Indeed. The data track pay offered in job adverts and they have shown a rapid acceleration over the past 18 months or so. But at least on …
The end of the cycle is nigh… Next Thursday will see the last scheduled meetings of the year for several European central banks. The ECB and BoE will grab most of the attention, but the SNB and Norges Bank will also be in action and we expect both to …
Inflation still rising in the Philippines The past week has brought mostly good news on the inflation front. Of the nine countries in the region to have reported November inflation figures, the y/y rate dropped or was stable in eight of them. (See Chart …
BJP win in Gujarat could boost reform agenda The incumbent BJP, under the leadership of Chief Minister Bhupendra Patel, secured a massive victory in the state election in Gujarat. The results announced on Thursday showed that it increased its assembly …
Q3 private consumption revised down Q3 real GDP growth was revised up to a contraction of 0.2% q/q from a 0.3% fall in the second estimate released yesterday. However, private consumption was revised down from a 0.3% q/q rise to 0.1% q/q. Rather than …
Consumer spending surpasses pre-virus levels The main driver behind the 0.6% q/q rise in Australia’s Q3 GDP was a 1.1% q/q increase in consumption, which lifted spending above its pre-virus trend for the first time since the start of the pandemic. The …
Egypt getting its IMF deal, but Tunisia made to wait The IMF will formally sign off on its deal with Egypt next week, but Tunisia’s deal remains up in the air, increasing the threat of a messy sovereign default. As we highlighted when the staff-level …
8th December 2022
South Africa’s political turmoil that severely endangered President Cyril Ramaphosa’s position has already shaken the country’s financial markets. In p art, this is related to the prospect of the ruling party attempting to shore up its dwindling support …
2nd December 2022
Commodity prices generally rose this week as Fed Chair Jerome Powell’s comments that smaller interest rate rises were likely led to a depreciation in the US dollar. Prices were also supported by news that China would relax some pandemic-related …
The national accounts data provided two pieces of good news this week, with revisions to the historical series and stronger-than-expected third-quarter growth leaving GDP higher than expected. While some argue that this will cause the Bank of Canada to …
Better surveys, but recessions still lie in store The batch of survey data released this week for November showed improvements in various measures of economic activity across the region. The manufacturing PMIs for Poland and Russia ticked up and the EC’s …
Venezuela: a baby step towards boosting oil output A meeting between the Venezuelan government and the opposition last weekend prompted the US to take the first steps towards easing sanctions. But there’s still a long way to go before sanctions are …
With weaker growth overseas and the drag from the stronger dollar now pushing exports lower, the resilience of consumption is the only thing keeping the economy from falling into recession. Mixed signals for Q4 GDP Although third-quarter GDP growth was …
Recession likely to be shallower We had been forecasting the Swiss economy to contract by 1% in 2023 but, with recent data suggesting that it is holding up better than we had anticipated, we now think GDP will be unchanged in 2023 compared to this year. …
This week’s data releases showed that higher interest rates are starting to influence the economy. This means that at some point the Bank of England will have to start to think more about the appropriate level of interest rates rather than the pace of …
Off the peak? The big event this week was the publication of flash inflation data which showed that, after rising for seventeen months in succession, headline inflation fell from 10.6% in October to 10.0% in November. (See here .) This was lower than we …
Valuations may stall equity outperformance India’s Sensex hit a fresh record high of 63,000 this week (see Chart 1), continuing its remarkable performance over the past few months in the context of the sell-off in equities elsewhere in the world. The …
Weak data, slowing inflation, dovish BoK A string of weak activity data, a sharp drop in inflation and dovish comments from the central bank support our view that the Bank of Korea’s tightening cycle is coming to an end soon. The final estimate of third …
Economy set for Q4 contraction due to virus hit The November PMI readings published this week underscored the economic cost of efforts to contain the current outbreak. The official services index fell to its lowest level since the height of the Omicron …
Soft data prompt repricing of rate expectations The financial markets this week scaled back their expectations for interest rate hikes by the RBA and are now pricing in a peak in the cash rate of 3.6%, down from 3.9% last week. (See Chart 1.) Chart 1: …
China’s EV push a major threat The 2.6% m/m drop in industrial production in October was the second consecutive fall. And while motor vehicle output rebounded from the plunge in September, it was still 16% below its 2019 level. Firms are still pinning …
OPEC+ keeping the world on its toes Eyes will turn to OPEC+ on Sunday and, while there have been contrasting reports that oil output could be raised or cut further, it looks increasingly likely that October’s agreement will be rolled over. But we don’t …
1st December 2022
Untangling Ghana’s fiscal mess? Official statements this week by the authorities in Ghana signalled commitment to restoring fiscal and debt sustainability, and left little doubt that this will include a sovereign debt restructuring. Finance Minister Ken …
25th November 2022
G7 oil price cap losing some of its bite Details about a potential price cap on Russian oil this week of $65-70pb are bringing us to the view that it won’t have much of an immediate impact on Russia. We think the combination of the EU oil embargo and the …
ECB officials were out in force again this week, disseminating clues about the size of the next rate hike and their plans on quantitative tightening (QT). Their comments suggest that a slowdown in the pace of tightening, from a 75bp to a 50bp hike, …
Research from the Bank of Canada suggests that half of all variable-rate, fixed-payment mortgage holders have now hit their so-called trigger rates, which means their payments will rise. This is one factor weighing on spending, with retail sales volumes …
Warmer words in US-China relations There has been a palpable easing of strains between China and the West since the cordial meeting last week between Xi and Biden . Xi agreed to restart the high-level talks that China halted when Nancy Pelosi visited …
Strike highlights need for labour market reform The costs of a strike by Korean truck drivers – the second this year – are starting to mount, with steel and cement producers reporting disruption. The Korean government estimated that the economic losses …
Foreign visitor numbers jump but services struggle Japan received 461,000 foreign visitors in October (seasonally adjusted), almost double the September figure. This is helping businesses in accommodation and transport, which media reports say are …
The most eye-catching statistic published this week was the net migration into the UK of 504,000 people in the year to June 2022. That’s a record high. It continued the recent trend of net inflows from the non-EU and net outflows to the EU. And it …
Riksbank has further to go This week’s 75bp hike by the Riksbank was in line with expectations, and the Bank’s new projections took its policy rate forecast closer to ours. (See here .) The higher interest rate path – despite Stefan Ingves’s suggestion …
RBNZ willing to send New Zealand into recession While the analyst consensus is that New Zealand will generate decent GDP growth of just under 2% next year, we already predicted last month that the economy will enter recession. And with the RBNZ this week …
Manufacturing powerhouse takes to the polls We’ve previously written at length about why state elections in India matter for economic policy . The upcoming vote in Gujarat – due to take place between 1 st and 5 th December with results expected on the 8 …
OPEC+ schisms growing as Saudi doubles down The volatility of oil prices has highlighted the uncertainty over the current OPEC+ oil output agreement and adds to our view that we do not think it will make it to its end-2023 expiry date. The price of Brent …
24th November 2022
Despite the resilience evident in the latest round of hard data, our recession tracker models suggest the odds of a downturn next year are still rising. Odds of recession rising Our recession tracker indicators all but guarantee the economy will contract …
23rd November 2022
This week Fed officials pushed back against the market rally in the wake of October’s unexpectedly weak CPI report, but with only limited success. Despite officials reaffirming that they still had “a ways to go” in tightening policy and that they …
18th November 2022
Poland’s blast underscores military escalation threat A missile strike that killed two people in Poland on Tuesday raised concern about a further military escalation in the region this week. Central and Eastern European (CEE) financial markets initially …
As the dust settles on this week’s Autumn Statement, we take a step back and answer three key questions. (Clients can catch up on our detailed analysis and our Drop In webinar following Thursday’s fiscal event here and here .) With the economy entering …
Lula’s spending cap exemption plans spook markets Brazil’s financial markets remained on the backfoot this week as the Lula team stepped up its fight against the spending cap. And, while officials have since tried to reassure investors, the developments …
Although the data this week showed renewed rises in the annual rates of CPI-trim and CPI-median inflation in October, our calculations show that the timelier 3-month annualised measures both declined. That could persuade the Bank of Canada to drop down …
In next week’s MPC meetings in South Africa and Nigeria, inflation concerns are likely to hold sway over economic woes, and we expect both central banks to keep raising interest rates. South Africa’s tightening cycle is likely to continue for some time, …
