Brazil’s monetary easing cycle will probably lead to higher spending in interest rate sensitive areas, such as furniture and appliances, autos and construction materials. But that won’t be enough to prevent overall GDP growth from slowing sharply – and by …
3rd October 2023
We think that the yields of Australian long-term sovereign bonds will fall by a bit less than those of US Treasuries over the next couple of years, even though they’ve moved in lockstep lately. But the picture looks a bit different, to us, in other …
Talk of “dollarisation” has recently re-emerged, despite broader moves in the EM world to challenge the hegemony of the US dollar. Indeed, the fact that Argentina is considering adopting the dollar underscores that the greenback will remain the currency …
This page has been updated with additional analysis since first publication . Industry stumbled in Q3 The 0.4% m/m rise in Brazilian industrial production in August failed to fully offset the decline in July and suggests that the sector was as a drag on …
This report has been updated with additional analysis, as well as a Chart of the key data. Gulf non-oil sectors cushioning slowdown; Egypt’s economy sputtering along The September release of PMIs for the Middle East and North Africa showed that activity …
Schisms with the EU. Wavering support for Ukraine. Sky-high inflation. The stakes in Poland’s general election on Sunday 15th October couldn’t be higher. Economists from our Emerging Europe and Financial Markets teams held an online briefing about the …
Note: We discussed the key takeaways from our Q4 Global Economic and Markets Outlooks in a Drop-In on Wednesday, 11 th October. To view the recording Click here . Table of Key Forecasts Global Overview – We think that the now popular assumption that …
This publication has been updated with additional analysis. Inflation rising, but not for long The rise in Switzerland’s headline inflation rate in September was largely due to the increase in oil prices in recent months, which caused energy inflation to …
Inflation surge starting to cool, but further rate hikes in store The small (by Turkey’s recent standards) rise in inflation to 61.5% last month, from 58.9% in August, provides the first signs that the inflation spike is close to levelling off. But the …
This page has been updated with additional analysis since first publication. Indian manufacturing growth cools a touch India’s manufacturing PMI moderated in September but remained high. However, there are reasons to think a further slight cooling in …
Construction spending in Korea is falling sharply as developers respond to an oversupply of new homes by cutting back on new projects. The sector’s weakness will remain a major drag on economic growth throughout next year. Property prices in Korea dropped …
While new RBA Governor Michelle Bullock didn’t spring any surprises at her first interest rate decision today, we think that the Bank will hike interest rates to a peak of 4.35% at its next meeting in November . However, we expect the RBA to pivot towards …
RBA will deliver final rate hike next month While new RBA Governor Michelle Bullock didn’t spring any surprises at her first monetary policy decision today, we think that the Bank will hike interest rates to a peak of 4.35% at its next meeting in …
By putting upward pressure on JGB yields and the yen, tighter monetary policy could lead to falls in the value of bonds and overseas assets held by Japanese investors. Insurance companies and pension funds have the most to lose. However, we do not think …
Strong production growth has helped to pull US natural gas prices below 2019 levels for most of this year. But prices should rise by the end of 2024 as production growth is set to ease and exports will surge when LNG export capacity rises by nearly a …
2nd October 2023
Markets have been in a febrile mood amid a growing belief that central banks will need to keep interest rates at elevated levels in order to properly throttle inflation. But are expectations that interest rates will remain high misplaced? Does that in …
September’s manufacturing PMIs suggest that global industrial activity stagnated at the end of Q3, and forward-looking indicators point to further weakness ahead. The recent rise in oil prices seemed to push up the prices of manufactured goods. But …
The latest above-50 readings in China’s PMIs are consistent with our view that China’s demand for commodities will remain solid in the second half of this year, but not grow strongly. The China PMIs released over the weekend pointed to fairly stable …
The higher-for-longer narrative took hold over the third quarter, pushing bonds and equities down in most markets. But we doubt that this narrative will last. We expect bond markets to rebound as inflation falls more quickly than widely anticipated. And …
The EM manufacturing PMIs for September were the proverbial mixed bag, but one commonality is that external demand remains fairly soft across the regions. Meanwhile, the further rise in the price components last month probably reflects the jump in oil …
ISM hits 10-month high; construction boosted by lack of homes for sale The ISM manufacturing index rallied to a 10-month high of 49.0 in September, from 47.6, but that still leaves the index at a level that, historically, has been consistent with GDP …
Saudi Arabia’s 2024 pre-Budget statement reaffirmed the government’s commitment to sustaining its loose fiscal stance, with the government now projecting budget deficits all the way out to 2026. That shouldn’t cause any problems given the Kingdom’s strong …
The stakes could not be higher for this year’s presidential election – with the head-to-head rematch between Joe Biden and Donald Trump offering starkly contrasting polices on trade, the environment and international relations. Historically, US …
Buying a first home has become increasingly difficult over the past 30 years. A high income is still essential, but other circumstances such as whether the individual is buying as part of a joint-income couple or has significant family wealth have become …
Last week we published ‘AI, Economies and Markets’, our in-depth report on the economic and market implications of artificial intelligence. The report and accompanying data painted a positive picture of the potential effects of artificial intelligence on …
We suspect that before the end of the year, the ECB will announce that it will end PEPP reinvestments before the end of 2024. This would allow the ECB to shrink its balance sheet more quickly and reinforce the message that monetary policy will remain …
The valuations of “risky” assets have only been undermined a little by the big rise in the yields of “safe” assets in recent months. We think that the valuations of risky assets may fall a bit more in the near term, as growth falters. But further ahead …
This page has been updated with additional analysis since first publication . PMI continued weakness signals poor growth till year end South Africa’s manufacturing PMI recorded a fresh large fall in September, suggesting that the pick-up in activity in …
This page has been updated with additional analysis since first publication. PMIs increase, but CEE industry still in the doldrums The manufacturing PMIs increased across most of Emerging Europe last month, but remained consistent with weak industrial …
Pause in price falls unlikely to mark the trough The stabilisation of house prices in September was a surprise given mortgage rates are still well above the level which allowed the first leg down in house prices to bottom out. But leading indicators of …
The PMIs for September suggest that manufacturing activity across Emerging Asia remained weak last month. Worryingly, the PMIs point to a further rise in price pressures across the region, with the input and output price subcomponents both rising. The …
House price gains will slow further over coming months The housing rebound will continue to lose momentum over coming months as affordability is increasingly stretched, but policy easing by the RBA should provide a renewed boost to prices next year. …
Policy support should drive a turnaround The PMI surveys suggest another month of stable economic activity in September. A continued acceleration in construction activity appears to have offset a further softening in services activity. Meanwhile, …
This page has been updated with additional analysis since first publication. Price pressures remain strong as economy is running hot The stronger-than-expected improvement in the latest Tankan survey suggests that the economy will continue to expand at …
Chief Global Economist Jennifer McKeown provides a sneak peek of our upcoming Q4 Global Economic Outlook. She tells David Wilder why “higher for longer” won’t survive economic weakness and also explains why monetary tightening hasn’t had the direct and …
29th September 2023
Overview – We expect GDP growth to slow from 2.1% this year to only 0.8% in 2024, with the economy still likely to experience a near recession around the end of this year. Core inflation will continue to fall back to the 2% target by mid-2024, with much …
While concerns about euro-zone public finances put upward pressure on bond yields there, the outlook for inflation will probably remain the focus for investors . In our view, that means bond yields in the euro-zone will fall by end-2024, but by much less …
The week is set to end with the US dollar a bit higher against most currencies and the DXY Index just below fresh year-to-date highs. The dollar’s latest gains coincide with yet another week of rising long-term bond yields in the US and elsewhere. But …
The recent acceleration in immigration may not be enough to keep the economy afloat, with the latest data and surveys pointing to an increased chance that GDP will contract over the rest of the year. 40,097,761 and counting Stats Can confirmed this week …
Economic growth across Sub-Saharan Africa is likely to pick up over the coming quarters, but a challenging external environment means that balance of payments positions will remain under strain and fiscal and monetary policy will need to stay tight. Our …
Our in-house metals demand proxies show that growth was subdued in mid-2023. There could be some pick-up in the coming months owing to additional Chinese infrastructure spending, but we think a more sustainable revival in global demand will only emerge in …
There wasn’t a clear trend in commodity prices this week. Natural gas prices in the US and Europe were among the largest risers, though those increases appear to have been driven by dips in regional output in both, and cold weather forecasts in the …
Brazil’s communication problems The minutes to last week’s central bank meeting in Brazil again presented a somewhat different picture to the statement accompanying the decision itself. Whereas the statement was largely unchanged from the previous one, …
Fair value calculations combine valuation analysis with a forward-looking view of rents. As such, these estimates reinforce our existing view that there is scope for declines in euro-zone yields, albeit limited. They also confirm that these falls are very …
SA's avian flu outbreak unlikely to sway the SARB South Africa is in the midst of a severe avian flu outbreak which, coming alongside the effects of loadshedding, has prompted fears of shortages and higher prices for eggs and chicken meat. But this is …
GDP-GDI gap left largely unexplained In the end, the comprehensive revisions to the GDP data changed almost nothing of substance – the real economy was still 6.1% bigger in the second quarter of this year than it was pre-pandemic in the fourth quarter of …
MNB and CNB continuing to toe a hawkish line The Hungarian and Czech central banks maintained fairly hawkish communications at their meetings this week, but we still think that interest rates will fall sharply in both countries by mid-2024. The Hungarian …
The increase in euro-zone bond yields earlier this week was a function of shifting global sentiment rather than a response to news from Europe itself. But it is a reminder that there are still underlying concerns about euro-zone public finances. In a week …
Core PCE inflation slowing rapidly despite resilient consumption The August income & spending data confirm that real consumption growth strengthened in the third quarter, but also cast doubt on the market narrative that resilient growth will see interest …
