Real estate equity prices pointed to around a 10% fall in euro-zone all-property capital values in 2022 and we expect a similar size fall this year. But while the latest REIT data show landlords were in a better financial position than before the GFC, the …
11th January 2023
Reform of the French pension system is notoriously difficult and it is possible that the proposals unveiled yesterday will be watered down or even withdrawn completely. However, on balance, we think there are more reasons for cautious optimism that they …
Widening of tolerance band has done little to improve market functioning Nomination of less dovish Governor would signal Yield Curve Control is on its way out However, renewed slowdown in inflation will prevent policy rate hikes The widening of the …
Stubbornly high inflation will prompt further RBA rate hikes While falling job vacancies point to rising unemployment, the resilience in retail sales coupled with stubbornly high inflation will prompt the RBA to press ahead with another 25bp rate hike …
Stubbornly high inflation will prompt further RBA tightening The renewed rise in inflation in November coupled with strong retail sales data will prompt the Reserve Bank of Australia to press ahead with another 25bp rate hike at its February meeting. …
We think Australia’s consumer price inflation remained at 6.9% in November (00.30 GMT) Catch up here on today’s Global Macro Drop-In where we discussed our 2023 outlook… …and sign up here for tomorrow’s Financial and Commodity Markets Drop-In Key Market …
10th January 2023
The activity and labour market data imply the economy carried more momentum into 2023 than we expected, but the weakness of temporary employment suggests cracks are showing beneath the surface. The revised preliminary estimate that GDP edged up by 0.1% …
NBR’s slows tightening again, likely the end of the cycle The 25bp interest rate hike by Romania’s central bank today, to 7.00%, probably brings the hiking cycle to an end. Today’s decision was expected by all analysts, including ourselves. The central …
Inflation still too high for Copom to breathe easily The higher-than-expected Brazilian inflation reading of 5.8% y/y last month, coming alongside growing fiscal concerns, will give Copom more cause to delay the start of its easing cycle. The outturn was …
There has been a further slight improvement in prospects for the euro-zone in recent weeks. Business surveys suggest that activity is no longer contracting sharply, headline inflation seems to be past its peak, and wholesale gas prices have plunged. …
In this Update , we take a look at the key elections that are scheduled across the emerging world this year. The most notable ones are in Argentina, Nigeria and Turkey, where opposition victories could be the catalyst for a shift away from the …
Getting worse in December but soon likely to be getting better The downturn in credit growth extended in December amid the economic disruption from reopening. But the worst of the disruption may have already passed. The shift toward living with COVID and …
After a stellar first six months, rising interest rates and a slowing economy brought commercial property returns crashing down in the second half of 2022. All-property total returns are therefore set for their worst year since 2008. And 2023 will not be …
Getting worse in December but soon likely to be getting better The downturn in credit growth extended in December amid the economic disruption from reopening. But the worst of disruption may have already passed. The shift toward living with COVID and …
While the shift towards higher taxes and spending after the pandemic appears to be here to stay, there is little to suggest an expanded state would curtail GDP growth. But without supply-side reforms aimed at solving the UK’s fundamental problems of low …
This report has been updated with additional table and chart of key data. Inflation surges higher on back of weaker pound Egypt’s CPI inflation rate jumped from 18.7% y/y in November to 21.3% y/y in December, its fastest pace since the end of 2017. (See …
Strong core inflation to prompt one final Norges Bank hike The continued strength of core inflation will encourage the Norges Bank to press on with another 25bp interest rate increase next week. While there is still some more upside risk to underlying …
Household spending may have fallen in Q4 already The slowdown in household spending in November largely reflects base effects from the ending of lockdowns in 2021. Even so, the data suggest that household spending may have started to fall last quarter. …
We think Norway’s headline inflation fell sharply in December… (07.00 GMT) … and edged lower in Brazil (18.00 GMT) Sign up for our Drop-In tomorrow on the outlook for the global economy in 2023 Key Market Themes The storming of Brazil’s congress by …
9th January 2023
The apparent resilience of employment in December has boosted hopes that the US can avoid a recession, but we still think that is unlikely. Employment is a coincident indicator whereas the only genuine leading indicators in the employment report – …
A large part of the real estate sector’s carbon footprint is related to electricity production and so will shrink over time as the use of renewables continues to expand. The biggest challenges to reducing property sector emissions will be in emerging …
Inflation falls again, Banxico to end tightening cycle in February Mexico’s headline inflation rate was unchanged at 7.8% y/y in December but policymakers at the central bank will have taken comfort from the fact that core price pressures are finally …
Labour’s big lead in the polls raises the question of what difference a Labour government would make to the economic outlook. The answer is probably not much. A tight grip on the public finances is likely by whichever party is in charge. And the …
Labour market even stronger than expected The stability of the euro-zone unemployment rate in November, at a record low of 6.5%, shows that the labour market held up even better than we expected at the end of last year. And the third successive monthly …
The implications of the invasion of Brazil’s congress by protestors yesterday are mainly political. But the riots could result in a long-lasting risk premium on the country’s financial assets, particularly if they prompt President Lula to double down on …
Mortgage rates have probably now peaked, but they remain at a level that makes further steep falls in house prices and a slump in housing market activity inevitable this year. If anything, the hard data show that the housing market slump has already begun …
Markets invariably quieten as the year turns, even as important developments continue to shape the macreconomic landscape. Below are three key issues that we’ve been focusing on during the relative quiet: The first relates to China’s reopening. Julian …
In less than two months, we should know who will replace Bank of Japan Governor Kuroda Haruhiko, whose term ends on 8 th April. Whoever replaces him will be under increasing pressure from the government to abandon Yield Curve Control (YCC), which has an …
The shift toward living with COVID will put some upward pressure on prices in China. But the uptick in inflation will not be as large as that seen in many other countries as they emerged from COVID controls over the past couple of years. While the initial …
Outlook improved, but headwinds remain The rise in German industrial output in November confirms that industrial output held up better than we had expected in Q4. However, while the recent slump in gas prices should help energy-intensive firms in the …
Outlook improved, but headwinds remain The rise in German industrial output in November suggests that industrial output has held up better than we anticipated in the fourth quarter in part because of an increase in production in energy-intensive …
Credit growth in China probably remained weak at the end of last year We think US CPI inflation fell further in December (Thu.) We expect rate hikes in Korea and Romania next week Key Market Themes While investors seem to have judged that today’s …
6th January 2023
Financial markets have begun 2023 on a cautious note, see-sawing on mixed data. Although it has dropped back today, the US dollar has started the new year on the front foot, rising against most other major currencies on the week as a whole. That said, …
Most commodity prices declined this week, with energy prices falling especially sharply. Unseasonably mild weather in Europe and the US weighed on heating demand, prompting a plunge in gas prices. The European natural gas price currently sits at levels …
Our key calls for 2023 highlight major shifts in the outlook for real estate. We expect all-property total returns to be negative for the first time since 2009. At a sector level, we expect retail to do best, ending industrial’s decade of dominance, while …
Although valuation premia in certain parts of the US stock market shrank significantly last year, we think there is still some room for this to continue in the coming decade and weigh on their relative performance. To re-cap, there was a marked reversal …
The resilience of the labour market is a risk to our view that the Bank of Canada will pause its tightening cycle after a final 25 bp hike this month, even as the slump in natural gas prices raises the chance that CPI inflation will fall faster than the …
While we expect mortgage rates will fall to 5.75% by end-2023, affordability will remain stretched. Alongside a weakening economy and falling house prices that will weigh on housing market activity. Indeed, we think 2023 will be the worst year for sales …
Sub-Saharan Africa’s grim year ahead Last year ended with the bang of Ghana’s sovereign default , and 2023 has started with economies bracing for disruptions due to the end of zero-COVID in China and a looming global recession. While these are likely to …
The data this week suggested that the weak global backdrop is being compounded by a deterioration in domestic activity, although the labour market still appears to be in good health. Domestic weakness adding to external headwinds The November trade data …
The past few weeks have brought the news that the UK economy is lagging even further behind its G7 counterparts. (See here .) One reason for this relative underperformance is real business investment, which accounts for 9.5% of real GDP and in Q3 was …
A worrying first week of Lula’s presidency The biggest event in the region this week was the inauguration of Brazil’s president Lula on 1 st January. And his first actions (and those of some of his cabinet) provide reasons for investors to be concerned …
Sharp decline illustrates that recession still more likely than soft landing The slump in the ISM services index to a 19-month low of 49.6 in December, from 56.5, is another signal from the surveys that despite the resilience of employment growth, …
While we think the hawkish ECB poses a near-term threat to euro-zone government bonds, we still expect their yields to be lower, in general, by the end of this year . Having climbed throughout December, developed market government bond yields have …
The narrative surrounding Europe’s energy crisis has completely shifted in recent weeks as warmer-than-normal winter temperatures have reduced heating demand and pushed gas prices down sharply. This will help to improve external positions and lower …
It was meant to be a discussion all about the upside and downside risks that clients should keep an eye on in 2023. But a growing online debate about attempts to push the renminbi in energy trade between China and the GCC countries sidetracked it. Group …
Labour market data boost odds of a soft landing The solid 223,000 gain in non-farm payrolls and drop-back in unemployment to a 50-year low in December will, at face value, do little to ease the Fed’s concerns about resilient core services inflation. …
Swiss manufacturing cruising, services snoozing The latest batch of surveys suggest that, in common with the euro-zone, prospects for the Swiss economy improved marginally at the end of last year. For a start, the KOF economic barometer for December …
