The unexpected surge in payroll employment in January has led to claims of an economic resurgence that will force the Fed to keep hiking interest rates but, on balance, we still think the real economy is losing momentum and will eventually tip into …
8th February 2023
Brazil’s president Lula seems to be on the warpath in his quest for lower interest rates and now has the central bank’s (BCB’s) independence in his sights. Were Lula to get his way, the experience from Brazil in the early 2010s and elsewhere in the …
Tunisia’s fragile balance of payments of position has deteriorated further over the past year and the dinar appears increasingly overvalued. We think that the currency needs to fall by at least 30% against the euro to restore competitiveness. The approval …
We think sovereign bond yields in Canada, Australia, and New Zealand will drop further by end-2023. The central banks of Canada, Australia, and New Zealand have generally been at the forefront of this tightening cycle in terms of starting to hike rates ( …
Since the full effects of the previous surge in energy prices and the hike in interest rates have yet to be felt, we still think the economy will succumb to a recession this year. Admittedly, pandemic savings and the government’s handouts appear to have …
Rates unchanged, rate cuts possible by year-end Poland’s central bank (NBP) kept its main policy rate on hold at 6.75% as expected today and, with the economy slowing and inflation near a peak, further hikes are unlikely. We expect the central bank to …
Markets’ focus shifting to forward guidance as pace of rate hikes slows Any hints of an end to tightening cycles are still strongly data-dependent But the data will allow for rate cuts sooner than many central banks now imply Now that inflation has …
The RBI further slowed the pace of monetary tightening with a 25bp hike to the repo rate (to 6.50%) today and, though it has left the door ajar for further tightening, the softer growth outlook and improvement in the inflation picture suggests to us …
RBI’s tightening cycle is probably at an end The RBI further slowed the pace of monetary tightening with a 25bp hike to the repo rate (to 6.50%) today and, though it has left the door ajar for further rate hikes, the softer growth outlook and improvement …
Q1 2023 to still see decent consumption growth Current readings dipped slightly in January's Economy Watchers Survey but the jump in outlook readings, suggests spending growth this quarter will still be decent. “Current conditions” dipped slightly from …
We think India’s central bank will deliver a final rate hike, of 25bp, to 6.5%... (04.30 GMT) … but expect policymakers in Poland to keep rates unchanged at 6.75% Inflation in Russia probably rose a bit, to 12%, in January (16.00 GMT) Key Market …
7th February 2023
The recent earthquakes that hit Turkey and Syria are a human tragedy and foremost in everyone’s minds. Nonetheless, the financial markets will also need to bear in mind the economic cost and, to the extent that this provides some comfort, the damage to …
A stronger than expected end to last year only postpones the euro-zone recession in our view. That will weigh slightly more heavily on property performance this year, as all-property rents may now fall slightly. But with yields rising faster than expected …
Deficit rebounds as easing supply shortages boost imports The December trade data show a rebound in both real exports and imports but, with those gains following steep declines in previous months and the surveys pointing to renewed weakness to come, the …
Rebound in auto exports offsets decline in commodity export prices A surge in motor vehicle exports drove export volumes higher at the end of 2022, even as lower commodity prices weighed on export values. While there is scope for motor vehicle exports …
The surge in interest rates and tightening in credit conditions last year resulted in a broad-based plunge in loan demand in the fourth quarter. Most banks expect to continue tightening standards this year, suggests the recent drop back in long-term …
Rebound in autos exports offsets decline in commodity export prices A surge in motor vehicle exports drove overall export volumes higher at the end of 2022, even as lower commodity prices weighed on export values. As the export order surveys are still …
Deficit rebounds as easing supply shortages boost imports The December trade data show a rebound in both real exports and imports but, with those gains following steep declines in previous months, the data still suggest that domestic and external demand …
Investors’ concerns about sovereign debt risks in frontier markets have eased a touch recently but several countries, particularly Tunisia and Pakistan, remain on the path to default. The latest (and last-minute) demands from China in debt talks with …
The latest business surveys suggest that the euro-zone will stagnate or suffer only a mild recession, but the money and credit data paint a much gloomier picture. Net lending was negative in December and lower than in any month since 2014, when the …
Slump in industrial production points to recession After proving resilient for most of 2022, German industrial production slumped in December, adding to the reasons to expect the economy to fall into recession. December’s 3.1% m/m fall in industrial …
House price falls pause (for now) We suspect that the pause in house price falls in January reported by Halifax will prove temporary. Despite the slight decline in mortgage rates, affordability still looks far too stretched for house prices to have …
The RBA raised interest rates by another 25bp and signalled that further tightening will be needed. We’re sticking to our forecast that the Bank will lift the cash rate to an above-consensus 3.85% by April. The Bank’s decision to lift the cash rate from …
RBA signals further interest rate hikes ahead The RBA raised interest rates by another 25bp and signalled that further tightening will be needed. We’re sticking to our forecast that the Bank will lift the cash rate to an above-consensus 3.85% by April. …
Boost from net trade should ensure decent rise in Q4 GDP Export volumes probably edged up last quarter while import volumes plunged so net trade should provide a boost to Q4 GDP growth. The decline in the trade surplus in December, from $13.5bn to …
Decades-high wage growth won’t be sustained The large jump in wage growth in December was mostly due to a surge in volatile bonus payments and it will slow over the coming months. The much quicker wage growth in December, rising from 1.9% y/y to 4.8%, …
Boost from net trade should ensure decent rise in Q4 GDP Export volumes probably edged up last quarter while import volumes plunged so net trade should provide a sizeable boost to Q4 GDP growth. The decline in the trade surplus in December, from $13.5bn …
Germany’s industrial production probably didn’t change much in December (07.00 GMT) We think the trade deficit in the US widened last month… (13.30 GMT) …while Canada’s merchandise trade balance fell back into deficit (13.30 GMT) Key Market Themes …
6th February 2023
Nigerians voted at the weekend in a presidential election whose outcome could bring relief to Africa's biggest economy after years of mismanagement. They faced a stark choice, from the continuity of the ruling party's Bola Tinubu to the seemingly …
The energy crisis in Central and Eastern Europe (CEE) has lost some of its bite as natural gas prices have slumped and countries have made good progress in replacing Russian energy supplies. This has brightened the near-term outlook and reduced the risk …
Most, but not all measures of house prices show that they are falling. That has led some to contend that cash buyers may be supporting prices. But we think it is just a matter of time before the ONS House Price Index (HPI) catches up with the Nationwide …
The newly-appointed head of the Brazilian development bank, BNDES, takes charge today and is likely to be under pressure to increase lending. But the experience from the 2000s suggests that credit provided by BNDES will do little to alleviate the …
Commercial and housing activity falls further, but expectations brighten The headline CIPS construction index showed a contraction in activity in January, with the housing index seeing a substantial decline. But the forward-looking indicators improved, …
Consumer spending weakened at the end of last year December’s retail sales data show that the sector ended 2022 on a weak note. We think total household consumption will fall in the first half of this year, pulling the economy into recession. The chunky …
And breathe. After a week that brought us a flurry of global data on inflation, GDP and the labour market – as well as the first major central bank meetings of the year – you can be forgiven for struggling to see the wood for the trees. At first glance, …
Economic growth in Indonesia slowed in the final quarter of last year and further weakness is likely as weak global demand, high inflation and elevated interest rates drag on activity. Today’s figures show that Indonesia grew by 5.0% y/y in Q4 2022, which …
Further slowdown likely Economic growth in Indonesia slowed in the final quarter of last year and further weakness is likely as weak global demand, high inflation and elevated interest rates drag on activity. Today’s figures show that the economy expanded …
In this episode: Forecasts are being revised up, the global tightening cycle is slowing down and markets are cheering. But are things really looking better? Group Neil Shearing reviews the recent data – including January’s stunning US payrolls numbers – …
5th February 2023
We think euro-zone retail sales contracted sharply in December (Tuesday) UK Q4 GDP is likely to confirm the economy avoided recession in 2022 (Friday) We expect central banks in Australia, Sweden, India, Mexico and Peru to hike rates next week Key …
3rd February 2023
Overview – We think prices will ease back in the coming months as optimism about China’s reopening is tempered and slower economic activity in advanced economies weighs on demand. However, the prospect of Fed easing and stronger economic growth in 2024 …
The US dollar looks likely to record its largest weekly rise against other major currencies since its cyclical peak in September of last year. While investors’ dovish interpretations of announcements by the Fed, BoE, and ECB led the dollar on a roundtrip …
The EU’s ban on imports of Russian petroleum products will come into force on Sunday, which could raise EU fuel prices and weigh on Russia’s product exports. However, we suspect Russia will offer steep discounts to non-EU buyers , which will help to …
South Africa’s upcoming State of the Nation Address will undoubtedly focus on addressing the energy crisis. But there’s little that the government can do to ease power cuts in the near-term before measures to improve electricity availability kick in down …
We expect a further slowing in office completions over the next few years as a combination of factors weigh on the profitability of new projects. But our latest review of the metro-level completion forecasts saw large upward revisions for Austin, NYC and …
The strength of the early January data appears to rule out the possibility of an imminent recession, but that won’t prevent inflation from continuing to fall sharply from here. Jobs report appears to justify Fed’s caution Fed officials seem to agree …
Pavel’s election victory & the Czech-China spat The victory for former NATO general Petr Pavel in the second round of the Czech presidential election last weekend ought to have limited immediate implications for the Czech economy, as the President has …
