While food inflation has surprised to the upside in major DMs, it seems to be at or near a peak. We expect a combination of base effects and an easing of underlying price pressures to drag on food inflation in 2023. Food inflation soared in the past …
2nd December 2022
The Ever Given made worldwide headlines when it became stuck in the Suez Canal in March 2021. The cargo ship's dilemma symbolised global supply chain disruptions that were reflected in a record surge in shipping costs. But those costs are now falling as …
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 …
Our forecast for a drop in house prices means renting looks a better option than buying for any holding period under 10 years. While this will encourage some potential buyers to rent instead, we doubt it will provide much support to the rental market …
Unemployment rate declines despite slowdown in hiring The slowdown in hiring in November did not prevent a decline in the unemployment rate, as the labour force contracted. The Bank of Canada will be more encouraged by the fall in the 3-month annualised …
Resilience in payrolls and wages won’t stop Fed from slowing rate hike pace The resilience of the labour market and the resurgence in wage pressures don’t change our view that core price inflation is going to fall more rapidly than the Fed believes, and …
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. …
There are only a few days to go until the next packages of EU sanctions on Russia targeting its oil trade come into force. There are a few key details still left to be finalised, but it seems to us that disruption to Russia’s oil trade and production is …
Unemployment rate declines despite slowdown in hiring The slowdown in hiring in November was not enough to prevent a renewed decline in the unemployment rate, as the labour force contracted. The Bank of Canada will be more encouraged by the fall in the …
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 …
Strength in employment & wages won’t prevent Fed from slowing rate hike pace The resilience of the labour market and the resurgence in wage pressures don’t change our view that core price inflation is going to fall more rapidly than the Fed believes, and …
Despite the rally that began in October continuing throughout November, US equities still underperformed their European counterparts in common-currency terms last month. Admittedly, exchange rate effects played a big role in that as the US dollar weakened …
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 …
There is a good chance that CPI inflation has peaked or will peak before the end of the year. There are even some signs that inflation is becoming less persistent. This may contribute to the Bank of England slowing the pace of rate hikes from 75 basis …
A fleeting recovery The better-than-expected 0.3% m/m rise in Brazilian industrial production in October only partly reversed the falls in output in the previous few months. And surveys suggest that the sector fared much worse in November. This supports …
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 …
Following the Nationwide data showing a larger-than-expected fall in house prices in November, we hosted an online Drop-In on 1 st December to discuss how far prices could fall and what the downturn could mean for transactions and construction. This …
If China’s authorities were to accelerate the abandonment of their zero-COVID policies, we think it could actually prove a headwind for global asset prices. But we doubt they will do so for a while yet. The protests in China in recent days have …
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 …
The EM manufacturing PMI broadly plateaued in November, but the surveys remained weak in parts of Central Europe and recorded sharp declines in Brazil, Colombia and Vietnam. On the bright side, price pressures appear to be easing further . The aggregate …
1st December 2022
Hopes may be rising that price pressures may finally be easing, but investors risk missing the fact that not all inflation cycles are alike. We think core inflation in the US will fall far faster than it will in the euro-zone, and this will have big …
We think US non-farm payrolls rose by a more modest 175,000 in November… (13.30 GMT) … while employment growth in Canada probably slowed to 25,000 last month (13.30 GMT) Catch up on our Drop-In discussing EM inflation dynamics here Key Market Themes The …
Although Chinese stocks have reversed a two year or so downward trend in the past month amid hopes that zero-COVID policies will end, we doubt this is a sign of things to come in the near term. Since its trough on 31 st October, the MSCI China Index has …
The latest manufacturing PMIs suggest that global industrial production is contracting, albeit with some signs of a slowdown in the pace of contraction in Europe. Product shortages have diminished almost everywhere, with any disruption related to China …
Total employment grew across the 30 metros, but at a slower pace as labour market conditions continued to ease. With our proprietary indicators pointing to a 90% probability of an imminent recession, we maintain the view that those metros worst affected …
Index drops below 50 mark The decline in the ISM manufacturing index to 49.0 in November, the lowest reading since the early stages of the pandemic, from 50.2, leaves it at a level consistent with a stagnation in broader economic growth. The decline in …
The latest manufacturing PMI data from China strengthens our view that China’s industrial metals demand growth slowed in November and will probably weaken further in December. China’s Caixin manufacturing PMI , released today, rose from 49.2 in October to …
Index slips below the 50 mark The decline in the ISM manufacturing index to 49.0 in November, the lowest reading since the early stages of the pandemic, from 50.2, leaves it at a level consistent with a stagnation in broader economic growth. The decline …
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 …
China's zero-COVID policy is under mounting strain as the economy reels and public anger grows. The government is responding but will it be enough to bring relief to China's economic outlook and its beleaguered public? And what do record infection numbers …
The damning report into corruption allegations surrounding South Africa’s President Cyril Ramaphosa has increased the possibility of him either resigning or being removed from office. Even if he stays on, the ruling ANC’s popularity will take a hit. To …
Real consumption boosted by motor vehicle rebound The strong 0.5% m/m increase in real spending in October illustrates that consumers are not buckling under the weight of higher interest rates, at least not yet. That gain follows a 0.3% m/m increase in …
Renewed optimism in global markets – in large part tied to hopes for a Fed “pivot” – pushed the US dollar down against most major currencies last month. But with a global recession on the horizon, we continue to think that the dollar rally will resume …
Slowdown now underway The weaker-than-expected Brazilian Q3 GDP growth figure, of 0.4% q/q, highlights that the weakening global economy and higher interest rates are bringing the recent period of strong growth to an end. And leading indicators suggest …
Labour market to soften from here, but remain tight The record-low euro-zone unemployment rate of 6.5% in October is likely to be as good as it gets for the region’s labour market. But the rise in unemployment from here will probably be small. The …
South Africa’s manufacturing PMI increased in November, to 52.6, but underlying activity in the sector is likely to remain subdued as the combination of sustained power cuts and fiscal and monetary policy tightening bites. And the pick-up in the prices …
Mixed bag, but industrial weakness likely in Q4 The manufacturing PMIs for November were a mixed bag, but suggest that weakening demand and the fading boost from easing supply shortages has begun to take a heavier toll on industrial sectors in Turkey, …
Sharp drop in prices as market adjusts to higher mortgage rates The 1.4% m/m drop in house prices in November was far larger than anyone expected, raising the risk that prices fall more rapidly and further in response to high mortgage rates than we …
Stable inflation keeps pressure off SNB The low inflation rate in November supports our view that the Swiss National Bank will not need to raise interest rates much further in the current cycle. Indeed, there is a growing chance that policymakers raise …
Further weakness ahead Manufacturing PMIs across the region fell further into contractionary territory in November, driven by a sharp decline in the employment index. We expect conditions to remain subdued as weaker global demand, high inflation and …
Indian manufacturing continues to buck the regional trend India’s manufacturing PMI edged up in November and continues to buck the weaker regional trend. The survey also indicates that price pressures are easing, reinforcing our view that the RBI is now …
More signs of weakness in industry The Caixin manufacturing PMI edged up in November but remained weak. Taken together with the official survey published yesterday, they suggest that downward pressure on industrial activity intensified last month. The …
More signs of weakness in industry The Caixin manufacturing PMI edged up in November but remained weak. Taken together with the official survey published yesterday, the surveys suggest that downward pressure on industrial activity intensified last month. …
Strength in capital spending won’t last Private investment rebounded last quarter and while firms’ projections at face value point to a further pick-up over the remainder of the financial year, the figures are consistent with a slowdown in real terms . …
Strength in business investment won’t last Private investment probably rebounded last quarter and while firms’ projections at face value point to a further acceleration over the remainder of the financial year, the figures are consistent with a slowdown …
Rapid worsening in affordability will continue to push down prices House prices continued to fall at a rapid rate in November and with housing affordability now the most stretched since the early 1990s, that downturn has much further to run. The 1.1% m/m …
30th November 2022
