Softer inflation will allow SARB to slow tightening Inflation in South Africa eased a bit more than expected, to 7.4% y/y, in November and there were encouraging signs that core price pressures are fading. The figures will provide room for the Reserve …
14th December 2022
We suspect investors are underestimating how disruptive the transition from zero-COVID will prove for China, which could threaten some of the recent rises in the country’s equity prices, bond yields and currency. But once that disruption has begun to …
The Bank of England can breathe a sigh of relief knowing that CPI inflation has peaked. But with activity holding up and wage growth still strengthening, the 2.0% inflation target is still a long way from being hit. As such, the Bank will still probably …
Core inflation likely to come down more slowly than Riksbank hopes The increase in Sweden’s measure of core inflation to 8.0% was a touch below expectations but it still marks a new 31-year high. With CPIF inflation having risen to well above the …
Wholesale inflation drops to 21-month low The fall in Indian wholesale price inflation to a 21-month low in November chimes with the sharper-than-expected drop in headline consumer price inflation released earlier this week. We maintain our view that the …
Inflation passed its peak, slower rate hikes more likely The fall in CPI inflation, from 11.1% in October to 10.7% in November (consensus 10.9%, BoE 10.9%, CE 11.1%,), means that inflation has peaked and the fall in core inflation from 6.5% to 6.3% will …
Strong investment intentions won’t survive coming recession Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen. Meanwhile, machinery orders were …
Services race ahead while manufacturing struggle Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen. The Tankan’s headline index for large …
On the face of it, the news of unlisted REITs reaching redemptions limits suggests cause for concern as it could point to forced sales over the coming months. However, both BREIT and SREIT have solid cash balances that can last through at least three more …
13th December 2022
Click here to read the full report. Overview – Economic growth will slow sharply in most of the region in 2023 as higher interest rates and weaker exports drag on demand. Our GDP growth forecasts are below consensus in most countries. With inflationary …
The recent slump in oil prices tells us one thing – that demand concerns are in the driving seat. Given that we expect a further slowdown in global growth in Q1 2023, we think prices could fall further. The Brent crude oil price has fallen by about 16% …
Click here to read the full report. Overview – Growth across the Middle East and North Africa is set to slow sharply, and by more than most expect, next year. Oil output cuts will weigh on the Gulf even as fiscal policy stays loose. And while IMF deals …
We think UK CPI inflation held steady at 11.1% in November (07.00 GMT) Euro-zone industrial production probably fell by about 2% m/m in October (10.00 GMT) We expect the Fed to deliver a 50bp hike and project a higher peak in rates (19.00 GMT) Key …
While today’s agreement on the EU’s “Carbon Border Adjustment Mechanism” leaves vital questions unanswered, it is a step towards the valid goal of making users pay for the emissions that they consume – wherever such emissions are produced. This Update …
Despite some mixed signals in the recent data, we still expect the tentative easing of labour market conditions already seen to push wage growth lower soon, with that slowdown gathering pace as employment growth continues trending lower. The November …
Stick a fork in it, inflation is done The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak in rates above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our …
Stick a fork in it, inflation is done The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our long-held …
Q3 likely to mark a peak for lending volumes The detailed mortgage lending data for Q3 show that demand was resilient to rising mortgage rates at first. Loan-to-income ratios crept up despite rising financing costs. But with interest rates on new …
Recession still likely, despite improvement in sentiment The further recovery in the ZEW in December confirms that sentiment in Germany has improved a bit, but it remains at a very low level and we still think Germany is now already in a recession. The …
Still a long road ahead to restoring debt sustainability The news that Ghana has secured a $3bn staff-level agreement with the IMF will go some way to easing the country’s economic crisis, but the government still needs to clear a number of hurdles to put …
Accelerating wage growth won’t make the Bank of England’s task easier Coming on the back of yesterday’s larger-than-expected rise in GDP in October, today’s news that the labour market is loosening only gradually and wage growth continues to accelerate …
Economy shows some resilience The large increases in both industrial production and retail sales in Turkey in October provide clear signs that activity is holding up well despite the various domestic and external headwinds. But we doubt this resilience …
Consumers shedding virus-related caution and inflation surging to multi-decades highs However, global headwinds are strengthening and import prices are slowing Bank would be very brave to start tightening during a global recession Window for policy …
The full impact of the RBA’s aggressive tightening cycle on household finances hasn’t been felt yet because one-third of all mortgages have fixed-rates. Around 60% of those will expire next year and the impact on household finances will be equivalent to …
We think tightness in the UK labour market eased in October (07.00 GMT) Germany’s ZEW survey may show an improvement in investor sentiment (10.00 GMT) US consumer price inflation probably fell back further in November (13.30 GMT) Key Market Themes With …
12th December 2022
Click here to read the full report. Overview – Emerging European economies are set for recessions this winter as the impact of high inflation, tight financial conditions and weakening external demand take their toll. Our GDP forecasts for 2023 are below …
The real returns from both US equities and 10-year Treasuries have often been quite good in the couple of years after past peaks in core inflation in the US, but the period following peak inflation in the early 1980s was an exception. We think that this …
After a year dominated by the war in Ukraine, a massive inflationary surge and equally aggressive central bank response and some extraordinary financial market volatility, what will 2023 bring? Here we set out our core views for the global economy and …
Lending showed little sign of slowing in November CRE lending grew solidly again in November, at a rate close to the six-month average, with other commercial sectors picking up the slack from slower growth in multifamily lending. Although lending growth …
Sharp drop in headline inflation may hasten end of tightening The sharper-than-expected drop in headline CPI inflation in November (to 5.9% y/y) pulls it below the ceiling of the Reserve Bank’s 2-6% target range for the first time in almost a year. We …
Industry to struggle as US enters recession Mexico’s industrial sector posted a solid 0.4% m/m rise in output in October but the big picture is that industry has stagnated since the middle of this year. And while more timely survey indicators have held up …
Although US corporate bond spreads have been falling since mid-October, we expect them to rise again before long as the global economy slips into recession. The spreads of investment-grade US corporate bonds, as captured by the option-adjusted spread …
Overview – Soaring interest rates and weak real income growth will result in a more pronounced slowdown in economic activity in both countries than most anticipate. With New Zealand’s central bank determined to push the economy into recession, we’re now …
We expect inflation to remain above the Bank of Japan’s 2% target through the middle of next year despite government utility price caps and falling non-food inflation over that period. One reason is that higher food import prices in recent months will …
Little appetite for borrowing Credit growth has now reversed all of its modest acceleration over the past year, a clear sign that monetary easing has failed to gain traction due to virus disruption and waning confidence among households and firms. …
We had expected 2022 to be a year in which growth generally disappointed, central banks struggled with sticky inflation and the lingering effects of the pandemic remained the biggest source of uncertainty for macro and market outcomes. And then Russia …
October’s rebound won’t prevent contraction in GDP in Q4 The 0.5% m/m rise in GDP in October was mostly due to the rebound after September’s extra bank holiday. Even so, the surprisingly strong rise could tilt the Bank of England towards another bumper …
Rebound in October likely to be a blip The larger-than-expected 0.5% m/m rise in GDP in October was mostly due to the rebound after September’s extra bank holiday. But it could tilt the Bank of England towards delivering another bumper 75bps interest rate …
The worsening tripledemic of Covid, influenza and RSV is unlikely to have a significant impact on economic growth, but it could weigh on employment and hours worked over the next few months. Covid case numbers remain relatively low but have been rising …
11th December 2022
Last week was a relatively quiet one for markets. The same won’t be said about this coming week. US inflation data and a slew of central bank decisions will give investors plenty to chew over as they scan for signs that the end of monetary tightening …
10th December 2022
We think US consumer price inflation continued to ease last month (Tue.) We expect the Fed to slow the pace of tightening with a 50bp hike (Wed.) Clients can register here for our Drop In for next week’s major central bank decisions (Thu.) Key Market …
9th December 2022
Even if oil prices don’t rebound substantially in the near term, we doubt developed market equities in the energy sector will reverse course and underperform the rest of the stock market next year. Developed market (DM) energy stocks have outperformed the …
Even after a small boost following the release of US PPI data today, the US dollar seems set to end this “data-light” week broadly unchanged against most major currencies. By contrast, we suspect next week will prove more volatile given the ten major …
A few weeks ago, we flagged the growing downside risks to our oil price forecasts due to weak Chinese demand. Despite the loosening of China’s COVID restrictions since then, we think the end to the flagship zero-COVID policy will only come in April 2023 …
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 …
Inflation pressures remain soft Russian inflation fell further last month, to 12.0% y/y, and the breakdown provided further signs that demand remains very weak. But this won’t offset the central bank’s concerns about pro-inflation risks and policymakers …
Overview – Higher interest rates have already resulted in a sharp property repricing in 2022. And with valuations still highly stretched and rental prospects weaker given the imminent recession, we think values will fall further next year. However, as …
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 …
