Rebound in trade surplus won’t prevent drag from net trade While the trade surplus bounced back in September, we’ve pencilled in a drag from net trade to Q3 GDP growth. The rebound in the trade balance, from $8.7bn to $12.4bn in September, was well above …
3rd November 2022
The Fed raised its policy rate by another 75bp today, to between 3.75% and 4.00%, but laid the groundwork in the accompanying statement for a downshift to a 50bp hike at the next meeting in mid-December. With Chair Jerome Powell noting repeatedly that the …
2nd November 2022
Fed continues with 75bp hike, but open to smaller 50bp increase next month The Fed raised its policy rate by another 75bp today, to between 3.75% and 4.00%, but laid the groundwork in the accompanying statement for a probable drop down to a 50bp hike at …
Demand remains resilient to high prices and slowing economy, for now Last week’s fall in commercial and strategic crude stocks dragged total reserves to their lowest level since November 2001, contributing to a rise in prices today. Gasoline and …
Downward revisions to expectations for earnings have taken a toll in the second half of this year so far on the S&P 500, which had been under pressure in the first half from a discount-rate-driven drop in its valuation. We suspect expectations for …
Economy lacking momentum There were broad-based falls in Russian industrial production and retail sales in September. The economy may have narrowly avoided another q/q contraction in GDP in Q3 as a whole, but there’s clearly no momentum in the economy …
2023 recession increasingly likely Our composite tracking models suggest that the economy is increasingly likely to fall into recession in 2023, although the risks of a downturn beginning before the end of this year still appear relatively low. Our …
Although the aggregate EM manufacturing PMI rose in October, a closer look at the surveys shows that there was a widespread deterioration in EM industry. Highly-open manufacturing economies including Taiwan, Czechia and Poland are struggling in …
We think the Fed will deliver another 75bp hike today (18.00 GMT) Norway’s central bank will probably hike by 50bp on Thursday... (09.00 GMT) …and we expect the Bank of England to raise its policy rate by 100bp (12.00 GMT) Key Market Themes We think an …
Lagging metros unlikely to reach pre-pandemic peaks anytime soon Employment continues to trend higher across the 30 metros, but nearly half remain short of pre-pandemic peaks, including all six major metros. Indeed, with job growth slowing, we don't …
Israel’s economy has been one of the fastest growing globally since the pandemic but there are a number of headwinds that will weigh on activity over the coming quarters. We expect a period of below-potential growth out to 2024. The likely victory for …
The latest manufacturing PMIs are consistent with a significant downturn in global industry. As higher interest rates take a further toll on demand, shortages should continue to alleviate, helping to ease price pressures. However, as the PMIs suggest, …
Despite the unanticipated strength in recent months, there are still good reasons to expect core inflation to fall markedly next year. That moderation will not require a deep recession and/or significant rise in the unemployment rate, although we do …
While the dollar has now reached a 20-year high and looks increasingly overvalued on a long-term basis, we think it will rise further in the near term as the global economy falls into recession and “safe-haven” demand increases further. Even if the FOMC …
German prime office rental growth is expected to slow sharply next year as the economy experiences the deepest recession in the euro-zone. Even so, we don’t expect rental growth to underperform as the low level of vacancy means the German markets are in a …
Although the resignation of Liz Truss as Prime Minister leaves the UK without a leader when it faces huge economic, fiscal and financial market challenges, the markets appear to be relieved. The pound has climbed from $1.12 to $1.13 and 30-year gilt …
Mortgage applications point to further falls in sales On the back of a rise in mortgage rates to above 7%, home purchase applications took another step down in October. That points to further declines in home sales in the coming months. With mortgage …
Labour market strength adds to case for 75bp hike New Zealand’s labour market remained very tight last quarter and coupled with the continued strength in inflation. the RBNZ will probably hike by 75bp in a couple of weeks. The 1.3% q/q rise in employment …
1st November 2022
Labour market strength will encourage RBNZ to hike by 75bp this month New Zealand’s labour market remained very tight last quarter and coupled with the continued strength in inflation. the RBNZ will probably hike by 75bp in a couple of weeks. The 1.3% q/q …
We expect the Fed to deliver a fourth 75bp rate hike, before slowing down (18.00 GMT) Sign up for our UK Drop-In looking ahead to the Bank of England’s policy meeting … … and for our Climate Drop-In on the forces that will drive the green transition Key …
This dashboard gives a holistic overview of financial conditions across major developed economies. It presents our proprietary financial conditions indices (FCIs) as well as a selection of input variables used in our FCIs. Our FCIs indicate the ease with …
Our underlying inflation indicators measure core inflation by tracking common changes across broad baskets of CPI components. Our underlying inflation measures use dynamic factor models to identify the common changes in prices from very broad baskets of …
The job openings and quit rates were little changed in September (see Chart 1), but the downward trends over the past six months point to an easing of labour market conditions which will weigh more heavily on wage growth next year. While the initial turn …
Goods price pressures evaporating as demand weakens The further fall in the ISM manufacturing index to 50.2 in October, from 50.9, illustrates that global economic weakness and the earlier surge in the dollar are catching up with the factory sector. But …
Globalisation isn't dead, but it is undergoing a fundamental shift which will reshape the global economy and markets in the years ahead. Group Chief Economist Neil Shearing discusses The Fracturing of the Global Economy, our major new research project, …
Colombia’s current account deficit has, somewhat surprisingly, widened this year despite the boost to the country’s terms of trade from high oil prices, and now stands at an alarming level. And the funding of the deficit has shifted towards more volatile …
Ahead of the start of COP27 in Egypt on Sunday, this Update explains why one should take the rhetoric of such events with a pinch of salt and focus instead on firm political actions and economic drivers. “COP” stands for ‘Conference of the Parties’ and, …
The dovish tilt among central banks has led to more talk of “pivots”, but this will mean different things for different banks. The ECB may be shifting to a slower pace of tightening, but the peak in rates is still some way off. That peak is closer for …
Russia’s decision to withdraw from the Black Sea Grain Initiative will exacerbate sky-high prices and tight global supply, and adds to the likelihood that prices hover around historical highs for the next few months. To recap, the Kremlin announced at the …
Industry a drag on growth in Q3 The 0.7% m/m decline in Brazilian industrial production in September suggests that the sector made a negative contribution to GDP growth over Q3 as a whole. With other sectors faring surprisingly well, Brazil’s economy …
After moving in broadly the same direction for much of 2022, we think that the returns from “safe” assets will generally diverge from those from “risky” assets between now and around the middle of next year. We suspect that long-dated government bond …
China’s official and Caixin October manufacturing PMIs diverged, but the crux of the matter is that both are painting a picture of weak industrial demand. With the services sector also struggling due to the zero-COVID policy, China’s consumption of both …
On some measures China’s current COVID situation is about as bad as it has ever been. While far fewer infections are being found daily than at the peak of the Omicron wave, new cases are geographically spread just as wide, with the result that the …
PMI picks up, but outlook remains gloomy South Africa’s manufacturing PMI picked up in October but persistent electricity supply problems, tight fiscal and monetary policy and a worsening external backdrop mean that the economic recovery will continue to …
The 0.4% q/q contraction in Czech GDP in Q3 provides the first clear sign that the economy as a whole is buckling. We think the economy is now in a recession which will last until early next year. Meanwhile, the manufacturing PMIs for October underscore …
Manufacturing activity remains resilient India’s manufacturing sector appears to have bucked the weaker regional trend, with an increase in its PMI last month. There was nothing in today’s release to dissuade the RBI from further tightening. The …
The Bank of Japan’s renewed difficulties in defending its 10-year yield target have prompted fresh speculation that it may abandon Yield Curve Control. However, neither concerns about the functioning of the bond market nor worries about a weaker yen …
House prices now falling as higher mortgage rates bite The jump in mortgage interest rates is now being felt in house prices, with Nationwide reporting the first month-on-month fall since July 2021. House prices are now set to stay on a sustained downward …
Asian manufacturing to remain weak Manufacturing PMIs across the region were downbeat in October owing to weak external demand and a deterioration in the employment outlook. We expect manufacturing to remain subdued, as weaker global demand, elevated …
The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. However, we still see a good chance that policy will be loosened …
RBA will lift rates more sharply than most anticipate The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. The Bank’s …
