We don’t expect the 10-year JGB yield to rise above the top of the Bank of Japan’s tolerance band, and think it may even fall back to the middle of that band next year as yields continue to decline elsewhere. Yields fell sharply around the world, and the …
11th November 2022
Below consensus growth for Taiwan in 2023 Surging demand for electronics products helped Taiwan’s economy sail through the pandemic. But with this tailwind now turning into a headwind, growth looks set to slow sharply. Export volumes have fallen back …
As the global economy enters recession, the outlook for natural rubber (NR) demand appears bleak. What’s more, stocks are already high. We expect prices to fall further in the near term, before some recovery in late 2023 on hopes of monetary easing and a …
Bank of Canada Governor Tiff Macklem said this week that the unemployment rate will need to rise to help restore price stability, but he also played down the significance of the strong gains in employment and average earnings in October. That suggests …
The big fiscal tightening set to be unveiled at the Autumn Statement on 17 th November is coming at a time when the economy is probably already in recession. And the fiscal consolidation, rumoured to be worth a total of £54bn (1.9% of GDP), could risk …
US CPI number triggers euro-zone rally Euro-zone financial markets rallied yesterday after US inflation data for October came in lower than expected. Immediately after the data release, Bund yields fell by around 15bp and the euro and DAX rose by 2-3%. …
Industry rebounds, but headwinds growing Industrial production in India rebounded strongly in September, but we don’t expect this strength to last. Higher interest rates and the slowdown in global demand look set to weigh heavily on the sector over the …
While the outcome of the midterms remains unclear, far more important for the economy was October’s softer-than-expected core CPI data, which support our view that the Fed won’t need to raise interest rates as far as markets had feared. Softer core CPI …
House prices falling in Sweden and Norway Sweden’s housing market has cooled significantly this year and prices are likely to fall outright soon. SEB’s monthly survey showed that in October, 22% of households expected house prices to rise whereas a much …
The dramatic improvement in EM public finances since the height of the pandemic is starting to run out of steam. And we think that fiscal dynamics are likely to get worse next year in parts of Central Europe and in most commodity-producing countries. …
Virus disruption has intensified recently, with COVID infections hitting a six-month high. The Politburo Standing Committee (PBSC, China’s highest leadership body), met yesterday to discuss the situation. According to the meeting readout, they agreed to …
Falls in Paris prime retail rents are set to continue into 2023 as weaker domestic and foreign spending weigh on tenant demand. And while the prospects for both are brighter for 2024, we think the high level of vacancy will ensure only a modest rebound in …
Underlying price pressures to remain very strong The rise in core inflation in Germany in October confirms that underlying price pressure in the country are still building. We expect the core rate to remain well above 2% throughout next year. Final HICP …
Power sector appears to be managing coal better Power shortages just over a year ago prompted a push by the government to shore up coal supply. Among the changes was a revamp of benchmarks for the stocks of coal that power stations should hold. …
Consumption resilient against Q3 virus wave The seventh COVID wave in Q3 has been the worst on record so far in terms of daily infections. Yet the Cabinet Office’s monthly estimate of private consumption for July and August was 0.6% above the Q2 average …
Recession begins and not because of the extra bank holiday About half of the 0.6% m/m fall in real GDP in September and half of the 0.2% q/q decline in Q3 as a whole was caused by the one-off reduction in the number of working days due to the extra bank …
Savings rate fell below pre-virus level in Q3 Comments by RBA Deputy Governor Bullock suggest that the risks to our above-consensus policy rate forecasts are shifting to the downside. Bullock noted today that the Bank is getting closer to the point where …
A slowdown in Q3 Turkish activity data for September show that industrial production has come under more pressure while retail sales have continued their remarkable resilience in the face of high inflation. On balance, we think that GDP growth slowed from …
Malaysia’s economy slowed in Q3, and we think growth will struggle over the coming quarters as lower commodity prices, weaker global demand and tighter monetary policy drag on prospects. According to figures published today, economic growth slowed to 1.9% …
Recession begins and not just because of the extra bank holiday Although at least half of the 0.6% m/m decline in GDP in September (consensus -0.4% m/m, CE -0.5% m/m) and the 0.2% q/q decline in Q3 as a whole (consensus and BoE forecasts -0.5% q/q) was …
Growth likely to decelerate further The economy slowed sharply during the third quarter, and we think growth will ease further over the coming quarters with lower commodity prices, weaker global demand and tighter monetary policy set to drag on prospects. …
Another 75bp hike, but end of tightening cycle on the horizon Mexico’s central bank delivered a fourth consecutive 75bp interest rate hike, to 10.00%, today but, with inflation now past its peak and the economy likely to slow sharply over the coming …
10th November 2022
China’s equities have received a boost recently from speculation that the country will ease its strict zero-COVID policy, but we don’t think this marks the start of a more sustained rally; we forecast benchmark Chinese equity indices to fall over the next …
While the renminbi, and many other currencies sensitive to the outlook for China’s economy, have rallied sharply against the dollar on hopes that China will shift away from its “zero-COVID” policy (and today’s softer-than-expected US CPI print), we doubt …
Commercial property valuations began to stabilise in Q3, as a large rise in property yields helped offset a further rise in alternative asset yields. And with the reversal of the “mini-Budget” meaning 10-year gilt yields have now likely peaked, a …
We think Malaysia’s GDP growth slowed sharply in Q3… (04.00 GMT) … and the UK economy contracted, marking the start of a recession (07.00 GMT) Consumer sentiment in the US probably remained low in early November (15.00 GMT) Key Market Themes US …
We doubt the recent underperformance of UK high-yield corporate bonds relative to those in the euro-zone will continue given the relative outlooks for monetary policy and economic growth. Corporate bond yields in developed markets (DMs), as measured by …
While the risk premium that pushed gilt yields up and the pound down after the mini-budget has mostly been reversed under the stewardship of Sunak and Hunt, the fear that the markets will baulk at any fiscal indiscipline means that the Chancellor will …
Nigeria’s demonetisation efforts are likely to add to already-high economic costs of the country’s unorthodox policies. The resulting currency falls will fuel inflation further and disruptions to activity are more or less inevitable, supporting our …
Egypt steps up renewables push at COP27 With the COP27 climate summit underway in Sharm El-Sheikh, Egypt announced it will build one of the world’s largest onshore wind farms with financing from the UAE as it steps up its green energy shift. The farm will …
Goods deflation begins; health insurance flips The better than expected 0.3% m/m increase in core consumer prices in October won’t on its own persuade the Fed to drop its hawkish stance. But we expect this to mark the start of a much longer …
Goods disinflation broadening; health insurance flips The better than expected 0.3% m/m increase in core consumer prices in October won’t on its own persuade the Fed to drop its hawkish stance. But we expect this to mark the start of a much longer …
A shift away from zero-COVID would be positive for China’s economy over the medium term. But the immediate disruption of reopening would probably exceed the cost of keeping the policy in place, especially if vaccine coverage among the elderly hadn’t …
Widespread downgrades, but still well short of the negative returns we expect Consensus forecasts for 2023 have been downgraded pretty sharply since the Spring, but we don’t think they have gone far enough. While the consensus is predicting total returns …
Further fall in inflation won’t stop Copom from keeping policy tight The fourth consecutive decline in Brazil’s inflation rate, to 6.5% y/y in October, will be welcomed by policymakers at the central bank. That said, inflation is still well above target …
The pace of global monetary policy tightening is slowing But neither history nor central bank guidance give a reliable steer of the future profile Early signs are that the Bank of Canada and US Fed will lead the retreat next year In recent weeks, …
Households stop borrowing outright as leadership recommits to zero-COVID Much weaker than expected credit growth – and an extremely unusual outright fall in lending to households – again underlines the difficulties policymakers are facing stimulating …
Chief UK Economist Paul Dales and Jonas Goltermann, a senior economist from our Global Markets team, held a client briefing shortly after the Chancellor’s 17th November statement, to discuss his final policy choices and their implications for the UK …
We’ll be discussing the implications for the economy and the financial markets of the Autumn Statement in a 20-minute online briefing at 4pm GMT on 17 th November. (Register here .) In his Autumn Statement on 17 th November the Chancellor, Jeremy Hunt, …
We still expect consumer spending to rise rapidly over the coming year. But with many overseas trading partners entering recession, exports will decline. That will prompt firms to pull in their horns and weigh on business investment. The upshot is that we …
Inflation hits a four-year high and will climb higher This publication has been updated with further analysis, as well as a chart and table of key data. The acceleration in Egypt’s CPI inflation rate from 15.0% y/y in September to a four-year high of …
Strong inflation requires Norges Bank to keep on hiking October’s stronger-than-expected inflation data pose an upside risk to our forecast for the policy rate to peak at 3%. But with house prices falling, the Norges Bank faces a tricky balancing act. The …
Demand collapses The October RICS Residential survey showed that the spike in quoted mortgage rates to over 6%, a level last seen in 2008, has triggered a collapse in buyer demand comparable to that seen in the financial crisis. That’s consistent with our …
The Philippines economy rebounded in the third quarter of the year, but we expect growth to slow over the coming months as high inflation, rising interest rates and weaker global demand weigh on prospects. GDP grew by 2.9% in seasonally-adjusted q/q terms …
Weaker growth ahead as headwinds mount The Philippines economy rebounded sharply in the third quarter of the year, but we expect growth to slow over the coming months as high inflation, rising interest rates and weaker global demand weigh on prospects. …
We think US consumer price inflation fell back in October (13.30 GMT) Mexico’s central bank is likely to deliver another 75bp hike… (19.00 GMT) … but we expect policymakers in Peru to keep interest rates on hold (23.00 GMT) Key Market Themes The …
9th November 2022
Oil demand defies high prices and slowing economy, for now Commercial crude stocks rose this week even though more crude was used by refiners. And despite the increase in refining output, gasoline and distillate stocks fell on strong demand. We think …
Doves take control at the NBP Poland’s central bank (NBP) announced (very late by its usual standards) that it had left interest rates unchanged at 6.75% at today’s MPC meeting, confirming previous comments from policymakers that they believe the current …
Inflation pressures remain soft Inflation in Russia fell more sharply than expected in October, to 12.6% y/y, but this won’t be enough to prompt the central bank to restart its easing cycle as policymakers are concerned about inflation risks in the …
